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Thursday, November 11, 2010

Russian Political, Economic, and Security Issues and U.S. Interests

Jim Nichol, Coordinator
Specialist in Russian and Eurasian Affairs

Russia made some uneven progress in democratization during the 1990s, but according to most observers, this limited progress was reversed after Vladimir Putin rose to power in 1999-2000. During this period, the State Duma (lower legislative chamber) came to be dominated by government-approved parties and opposition democratic parties were excluded. Putin also abolished gubernatorial elections and established government ownership or control over major media and industries, including the energy sector. The methods used by the Putin government to suppress insurgency in the North Caucasus demonstrated a low regard for the rule of law and scant regard for human rights, according to critics. Dmitriy Medvedev, Vladimir Putin’s chosen successor and long-time protégé, was elected president in March 2008 and immediately chose Putin as prime minister. President Medvedev has continued policies established during the Putin presidency. In August 2008, the Medvedev-Putin “tandem” directed wide-scale military operations against Georgia and unilaterally recognized the independence of Georgia’s separatist South Ossetia and Abkhazia, actions that were censured by most of the international community but which resulted in few, minor, and only temporary international sanctions against Russia.

Russia’s economy began to recover from the Soviet collapse in 1999, led mainly by oil and gas exports, but the sharp decline in oil and gas prices in mid-2008 and other aspects of the global economic downturn put a halt to this growth. The government reported an 8% drop in gross domestic product in 2009. This decline exacerbated existing problems: 15% of the population live below the poverty line; an unreformed healthcare system and unhealthy lifestyles contribute to a population decline; domestic and foreign investment is low; inflation hovers around 12%-14%; and crime, corruption, capital flight, and unemployment remain high. Economic growth has picked up somewhat in 2010.

Russia’s military has been in turmoil after years of severe force reductions and budget cuts. The armed forces now number about 1.0 million, down from 4.3 million Soviet troops in 1986. Readiness, training, morale, and discipline have suffered. Russia’s economic revival in the 2000s allowed it to substantially increase defense spending, and some high-profile activities were resumed, such as Mediterranean and Atlantic naval deployments and strategic bomber patrols. Stepped-up efforts were launched in late 2007 to further downsize the armed forces and emphasize rapid reaction and contract forces. The global economic downturn and strong opposition among some in the armed forces appear to have slowed force modernization.

After the Soviet Union’s collapse, the United States sought a cooperative relationship with Moscow and supplied $17 billion in aid for Russia from FY1992-FY2010 to encourage democracy and market reforms and to prevent the proliferation of weapons of mass destruction (WMD). U.S. aid to reduce the threat posed by WMD proliferation has hovered around $700- $900 million per fiscal year, while other foreign aid to Russia has dwindled. Despite rising U.S.- Russia tensions in recent years on issues such as NATO enlargement and proposed U.S. missile defenses in Eastern Europe, the two countries found some common ground on anti-terrorism and non-proliferation issues; Russia’s 2008 conflict with Georgia threatened such cooperation. The Obama Administration has worked to “re-set” relations with Russia, which welcomed the Administration’s announcement in September 2009 of the cancellation of the planned deployment of missile defenses in Eastern Europe. The Administration has hailed the signing of a new Strategic Arms Reduction Treaty on April 8, 2010, and the approval of new sanctions against Iran by Russia and other members of the U.N. Security Council on June 9 , 2010, as signifying the “re-set” of bilateral relations.

Date of Report: November 4, 2010
Number of Pages: 61
Order Number: RL33407
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