BASIC INFORMATION

Full Country Name: The Russian Federation


Country Profile: Russia

Area: 17,075,400 square kilometres
Population: 143,500,000 (2005)
Capital City: Moscow
People: 81.5% Russians, Tatars 3.8%, Ukrainian 3% (more than 100 nationalities in all)
Languages: Russian, other.
Religion(s): Orthodox Christian, Muslim, Jewish and Buddhist.
Currency: 1 Rouble = 100 Kopeks
Major political parties: United Russia, Communist Party, Liberal Democratic Party, Just Russia.
Government: Democratic Federation.
Head of State: President Vladimir Putin
Prime Minister/Premier: Viktor Zubkov
Foreign Minister: Sergei Lavrov

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 1 person per square kilometre.

HISTORY

The origins of the Russian states as we now know it 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. After his death, 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 in their different times 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 and deposed Tsar Nikolai II and his family were shot.

The early years of Bolshevik rule were marked by civil war and mass starvation. While within the party there was considerable rivalry for power in Lenin’s later years, when he was largely incapacitated, it wasn't until 1929 that Stalin emerged as the undisputed leader of the Communist Party. 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. 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.

Soviet Union

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. But despite efforts to improve the economy, growth rates steadily declined and social problems grew. During this period, the Soviet Union became involved in a prolonged and bloody occupation of Afghanistan. By the early 1980s, there was a general feeling that the Soviet economy and society was stagnating and the more forward-looking elements in the Party were acknowledging privately that they could not carry on like this. However, Brezhnev's immediate successor, Andropov, who might otherwise have brought in reform, died shortly after taking up office.

Gorbachev

After Gorbachev's arrival in power in 1985 he rapidly began his campaign of perestroika (restructuring), liberalising both the economy and the political system. Gorbachev’s goal was to build a better form of socialism. Gradually, however, the very process of democratisation and glasnost (openness) 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 quickly 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 sovereignty, 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. By the end of 1991 the dissolution of the USSR left Gorbachev with no option but to resign as its President.

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 it’s 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.

POLITICS

The Russian Federation (Russia) is recognised in international law as continuing the legal personality of the former Soviet Union (USSR) which was dissolved on 31 December 1991. The Russian Federation is currently divided into 85 administrative units known as 'federal subjects'. This includes 21 republics linked to non-Russian minorities, 8 territories, 47 regions, 7 autonomous regions, and the cities of Moscow and St Petersburg. However, a programme of referenda in various federal subjects means that some are set to merge over the next few years.

Vladimir Putin was formally elected President on 26 March 2000. He kept largely intact the government he had inherited from President Yeltsin although a reshuffle in March 2001 placed some of his own loyalists in key positions.

During his first term, 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, have so far ensured his continuing personal popularity and given him the confidence to press ahead. Although progress on some politically and socially contentious issues like energy sector reform and pensions has been more limited, overall this has probably been the most stable and prosperous period for Russia since the break up of the USSR. President Putin won a second term on 14 March 2004 with a landslide majority, in elections criticised by the OSCE as 'free but not fair'. Results from the Duma (Parliamentary) elections on 2 December 2007 show an overwhelming victory for the incumbent majority party in the Duma, United Russia, whose party list was headed by President Putin. With 64.1% of the vote and 315 seats in the Duma United Russia is expected to form a two-thirds majority there, allowing it to make changes to the constitution if it so wishes. Three other parties will also be represented in the new Duma: the Communists, A Fair Russia and the nationalist Liberal Democratic Party (LDPR). Parliamentary observers from the OSCE and Council of Europe described these elections as 'not fair' and drew attention to unbalanced media coverage and the use of state resources to favour United Russia. The EU issued a statement on 4 December noting media restrictions and that procedures during the electoral campaign did not meet international standards and commitments voluntarily assumed by Moscow. More generally many observers are concerned about the often highly restrictive and authoritarian brand of 'managed democracy' which Putin now oversees. Presidential elections are scheduled to take place on 2 March 2008. President Putin has stated his intention, in accordance with Russia's constitution, not to stand for a third term as President, but is expected to continue to play an active role in Russian political life.

BBC News Country Timeline: Russia

ECONOMY

The Russian economy is booming. There have been seven years of strong growth, last year at 6.8%, up from 6.5% in 2005. Russia’s is the tenth largest economy in the world, with a GDP of US$975 billion (2006 figure). Since 2000 the country has run large fiscal and trade surpluses, accumulating international reserves in excess of $400 billion. Inflation last year slowed to 9%, the lowest post-Soviet reading, but is likely to pick up in 2007, due to high global commodity prices, and some fiscal loosening.

The economy initially recovered after 1998, spurred by the competitive advantage of currency devaluation. High oil prices have been important. But the drivers of GDP growth are changing. Investment, currently around 25% year on year, and consumption, growing steadily at 11%, are now the key locomotives. And a rapidly-expanding bank sector (deposits up 35% last year, loans up 47% - albeit from low bases) is an important factor in Russia’s economic evolution.

Energy Sector

Hydrocarbons remain a crucial component of the Russian economy, accounting for over 20% of GDP, 50% of federal budget revenues and 60% of exports. Oil, gas and metals together comprise 80% of Russia’s exports. These figures underline Russia’s exposure to global commodity markets. But booming imports are already eroding the trade surplus, while the budget surplus is falling under the weight of fiscal loosening (budget spending is up 27% this year). The Russian Ministry of Economic Development and Trade believes that both will be close to zero by 2010. These trends are likely to constrain liquidity, squeezing the expansion of credit, and hence consumption growth. From 2010, the government will face sharply constrained macroeconomic conditions.

To date Russia has dealt with its massive oil windfalls in a fiscally sound, responsible manner. In 2004 the Ministry of Finance created the Stabilisation Fund, which was designed to protect the country from the negative impacts of high inflow of oil related capital (so-called Dutch disease) and to create a reserve in the case of a future financial crisis. By the end of September 2007 the Fund had accumulated over $140 billion. The Fund has also been used to pay off foreign debt. Russia’s outstanding Paris Club debt of $22.5bn was paid off early in August 2006, the largest single debt repayment in history. In his budget address in 2007, President Putin announced that from 2008 the Stabilisation Fund would be split into two components - a Reserve Fund, to protect against a possible economic downturn, and a Fund for National Wellbeing, focused on social spending, including future pensions.

Since 2001, there has been a marked increase in the state’s involvement in the economy, particularly in the energy sector. Growth in the energy sector has slowed significantly, from around 9% between 1999 and 2004, to around 3 %.

It is also state-dominated firms that are leading the investment boom. For example Gazprom’s investment budget this year is $29 billion. But, as a World Bank report recently noted, the Russian State has barely reformed in the last decade. In the medium-term, the World Bank warned that inefficiency in the state sector may weigh heavily on economic growth.

Potential risks

Russia faces wider economic problems, currently 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 2007 World Bank’s Ease of Doing Business survey ranks Russia 106th out of 178 countries, behind Paraguay and Ethiopia and just ahead of Nigeria and Bangladesh. And in the “Ease of getting business licenses” category, it came 177th out of 178, with only Eritrea ranked lower. International surveys suggest that corruption is endemic in Russia. And despite a number of high-profile initiatives, shows worrying signs of worsening. This year, Russia fell 22 places in Transparency International’s corruption perception index to 143rd out of 180 countries. It now ranks alongside Indonesia, Gambia and Togo.

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. Many analysts predict that it could fall from its current 143m to 120-125m by 2025. Male life expectancy is now 58 years, comparable to Bangladesh. There is already a shortfall of appropriately-trained workers, which is exacerbated by low labour mobility.

International involvement

Russia’s involvement in the international economy is deepening rapidly. Foreign Direct Investment in Russia reached $13.7 billion in 2006, while Russian companies are increasingly interested in foreign acquisitions. Russia is continuing talks on WTO accession. It has completed bilateral negotiations with almost all member countries, and is now at the multilateral phase. At the OECD's annual ministerial meeting in May 2007 member states agreed to open accession talks with Russia.

The UK and Russia

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. There are now over 400 UK companies operating in Russia.

Basic Economic Facts

GDP: US$ 975billion (2006)
GDP per head: US$ 10,700 (2006))
Annual Growth: 6.9% (2006)
Inflation: 9% (2006)
Major Industries: Oil, gas, timber, metals, machinery and chemicals
Major trading partners: Germany (9%), US (7.7%), Ukraine (4.9%) and Belarus (5.4%).
UK exports (2006) £2,058 millionUKImports (2006) 5,028 million
UK FDI in Russia $7 billion (2006)
UK Investment in Russia $9 billion (2006)

UK Trade & Investment Country Profile: Russia

HUMAN RIGHTS

While human rights and civil freedoms have improved dramatically since the collapse of the USSR, some concerns remain which continue to attract public and parliamentary interest. These include human rights violations in Chechnya and the North Caucasus, the rule of law, torture, the development of civil society, media freedom, xenophobic or racially motivated attacks and conditions in the armed forces.

Further details on the human rights situation in Russia, and the UK government’s efforts to improve the situation, can be found on page 86 of the 2006 Annual Report on Human Rights:

Human Rights Report 2006

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 has been 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. While large-scale military action by federal troops has now ceased, low intensity fighting involving local Chechen forces continues, especially in the highland south. There are frequent reports of explosions and shootings in the republic and elsewhere in Southern Russia 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 the death of Shamil Basayev in 2006. Basayev 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. Following another election held under questionable conditions a pro-Kremlin successor, Alu Alkhanov, was elected President on 29 August 2004. Parliamentary elections in the Chechen Republic were held in November 2005, resulting in an overwhelming victory for United Russia. Although the elections were held without serious incident, there were few international observers, partly due to the serious ongoing security situation in the region. Ramzan Kadyrov, son of assassinated former President Akhmad Kadyrov, became President of Chechnya in February 2007. He exercises a high degree of personal control over the Chechen authorities.

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.

RUSSIA'S RELATIONS WITH THE UK

Relations between the UK and Russia (2003 was their 450th anniversary) have been transformed since 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.

The UK has a relationship with Russia across a wide range of spheres. The former Minister for Europe, Rt Hon Geoff Hoon MP, set out the UK's Bilateral relationship with Russia in an adjournment debate to the House of Commons on 9 May 2007.

Diplomatic Representation

UK representation in the Russian Federation
Russian Federation representation in the UK

Development Assistance

In financial year 2005/06 the Foreign and Commonwealth Office provided approximately £2.2m of development assistance through its Devolved Programme Budget and Global Opportunities Fund. These programmes funded projects relating to education, rule of law, sustainable development, human rights, democracy, economic governance, climate change and energy issues.

DFID’s bilateral engagement with Russia started in the early 1990s, initially supporting Russia’s transition to a market economy. Since 2002 the focus has shifted to a set of policy issues based around the Russian government’s administrative and social reforms. Over the period 2001 – 2006, over £50m has been allocated to support this. In addition, there have been annual contributions of between £2-3 million for humanitarian operations in the North Caucasus.

In 2005/06 DFID’s Russia spending, including assistance to the North Caucasus, amounts to some £7m. The United Kingdom also provides assistance through the EU. The main EU TACIS programme for Russia amounted to €50m in 2005, plus €20m for the North Caucasus region. The UK share of this assistance was approximately 17%. More details of these projects can be found on our Moscow Embassy website.

Cultural Relations with the UK

The British Council has wide representation in Russia and takes the lead in cultural programmes and exchanges: British Council Russia.

TRAVEL

Travel advice: Russia

USEFUL LINKS

Travel advice: Russia
British Embassy, Moscow
British Consulate, St Petersburg
British Consulate, Ekaterinburg
British Council Russia
UK Trade & Investment Country Profile: Russia

Last reviewed: 13 December 2007