Political History and Economics of the Russian Federation in Vilademir Putin’s Leadership Period by Elnur MIKAYILOV

Vilademir Putin

Vilademir Putin

This research investigated Russia’s past and today from its economical and political dimensions as well. Putin’s aim is to make Russia big and powerful country as how USSR was a strong government 15 years ago. Analyzes also show that’s since Putin’s term in Russia there’re much economical growth in Russia’s economy and political chaos has been changed to politically stability in Russia. Putin placed special importance on the rights of Russian citizens living abroad.

In summary, by giving priority to political reforms through his first year in power, President Putin will probably be trying to extend reforms to several other areas. Another priority of Russian foreign policy would be to achieve integration with Europe. Though not making any clear reference to the United States, Putin saying that the United States should abide by the rules of international law.

Keywords: NIS(Newly Independent States), Putin, Russia, Russian Economy, Russia’s Political History.

1. The Russian Federation

Russia’s area is about 17 million square kilometers (6.5 million sq. mi.). It remains the largest country in the world by more than 2.5 million square miles. Its population density is about 22 persons per square mile (9 per sq. km.), making it one of the most sparsely populated countries in the world. Its population is predominantly urban.

Russia’s educational system has produced nearly 100% literacy. About 3 million students attend Russia’s 519 institutions of higher education and 48 universities. As a result of great emphasis on science and technology in education, Russian medical, mathematical, scientific, and space and aviation research is generally of a high order. The number of doctors in relation to the population is high by American standards, although medical care in Russia, even in major cities, is far below Western standards. Most of the roughly 150 million Russians derive from the Eastern Slavic family of peoples, whose original homeland was probably present-day Poland. Russian is the official language of Russia,and an official language in the United Nations. As the language of writers such as Tolstoy, Dostoevsky, Chekov, Pushkin, and Solzhenitsyn, it has great importance in world literature .

The Russian labor force is undergoing tremendous changes. Although well-educated and skilled, it is largely mismatched to the rapidly changing needs of the Russian economy. Millions of Russian workers are underemployed. Unemployment is highest among women and young people. Many Russian workers compensate by working other part-time jobs. Following the collapse of the Soviet Union and the economic dislocation it engendered, the standard of living fell dramatically. The standard of living has been on the rise since 1999, but almost one-third of the population still does not meet the minimum subsistence level for money income. The Russian Ministry of Economic Development  and Trade estimates that the percentage of people under the subsistence level will gradually decrease by 23%-25% in the period up to 2005. Moscow is the largest city (population 8.3 million) and is the capital of the Federation. Moscow continues to be the center of Russian Government and is increasingly important as an economic and business center. Its cultural tradition is rich, and there are many museums devoted to art, literature, music, dance, history, and science . It has hundreds of churches and dozens of notable cathedrals; it has become Russia’s principal magnet for foreign investment and business presence .

St. Petersburg, established in 1703 by Peter the Great as the capital of the Russian Empire, was called Petrograd during World War I and Leningrad after 1924. In 1991, as the result of a city referendum, it was renamed St. Petersburg. Under the Tsars, the city was Russia’s cultural, intellectual, commercial, financial, and industrial center.

After the capital was moved back to Moscow in 1918, the city’s political significance declined, but it remained a cultural, scientific, and military-industrial center. The Hermitage is one of the world’s great fine arts museums. Finally, Vladivostok, located in the Russian Far East, is becoming an important center for trade with the Pacific Rim countries. The high growth rate of AIDS cases will have negative economic consequences. Investment will suffer from the diversion of private and government funds to AIDS treatment. The problems of population aging will be magnified, especially since about 60% of infected individuals in Russia are between 20 and 30 years of age .

Russia’s population is falling. Lower birth rates and higher death rates reduced Russia’s population at a 0.5% annual rate during the 1990s. By comparison, although in many developed countries birthrates have dropped below the long-term population replacement rate, in only a few countries is the population actually declining.

Population decline is particularly drastic in Russia, with higher death rates especially among working-age males due to poverty, abuse of alcohol and other substances, disease, stress, and other afflictions. Russians generally disapprove of permanent or temporary immigration of working-age males from countries other than the Russian-speaking former Soviet states that might help solve economic problems brought on by its declining population .

2. History of Russia

Human experience on the territory of present-day Russia dates back to Paleolithic times. Greek traders conducted extensive commerce with Scythian tribes around the shores of the Black Sea and the Crimean region. In the third century B.C., Scythians were displaced by Sarmatians, who in turn were overrun by waves of Germanic Goths. In the third century A.D., Asiatic Huns replaced the Goths and were in turn conquered by Turkic Avars  in the sixth century. By the ninth century, Eastern Slavs began to settle in what is now Ukraine, Belarus, and the Novgorod and Smolensk regions. In 862, the political entity known as Kievan Rus was established in what is now Ukraine and lasted until the 12th century. In the 10th century, Christianity became the state religion under Vladimir, who adopted Greek Orthodox rites. Consequently, Byzantine culture predominated, as is evident in much of Russia’s architectural, musical, and artistic heritage. Over the next centuries, various invaders assaulted the Kievan state and, finally, Mongols under Batu Khan destroyed the main population centers except for Novgorod and Pskov and prevailed over the region until 1480 .

In the post-Mongol period, Muscovy gradually became the dominant principality and was able, through diplomacy and conquest, to establish suzerainty over European Russia. Ivan III (1462-1505) was able to refer to his empire as “the Third Rome” and heir to the Byzantine tradition, and a century later the Romanov dynasty was established under Tsar Mikhail in 1613. During Peter the Great’s reign (1689-1725), Russia began modernizing, and European influences spread in Russia. Peter created Western-style military forces, subordinated the Russian Orthodox Church hierarchy to the Tsar, reformed the entire governmental structure, and established the beginnings of a Western-style education system. His introduction of European customs generated nationalistic resentments in society and spawned the philosophical rivalry between “Westernizers” and nationalistic “Slavophiles” that remains a key dynamic of current Russian social and political thought .

Peter’s expansionist policies were continued by Catherine the Great, who established Russia as a continental power. During her reign (1762-96), power was centralized in the monarchy, and administrative reforms concentrated great wealth and privilege in the hands of the Russian nobility. Napoleon failed in his attempt in 1812 to conquer Russia after occupying Moscow; his defeat and the continental order that emerged following the Congress of Vienna (1814-15) set the stage for Russia and Austria-Hungary to dominate the affairs of eastern Europe for the next century. During the 19th century, the Russian Government sought to suppress repeated attempts at reform from within. Its economy failed to compete with those of Western countries . The government suppressed opposition and manipulated popular anger into anti-Semitic pogroms. Attempts at economic reform, such as land reform, were incomplete .

3. The U.S.S.R. And The Russian Federation: The Process of Transformation

The ruinous effects of World War I, combined with internal pressures, sparked the March 1917 uprising, which led Tsar Nicholas II to abdicate the throne. A provisional government came to power, headed by Aleksandr Kerenskiy. On November 7, 1917, the Bolshevik Party, led by Vladimir Lenin, seized control and established the Russian Soviet Federated Socialist Republic. Civil war broke out in 1918 between Lenin’s “Red” army and various “White” forces and lasted until 1920, when, despite foreign interventions, the Bolsheviks triumphed. After the Red army conquered Ukraine, Belorussia, Azerbaijan, Georgia, and Armenia, a new nation was formed in 1922, the Union of Soviet Socialist Republics. The U.S.S.R. lasted 69 years. In the 1930s, tens of millions of its citizens were collectivized under state agricultural and industrial enterprises. Millions died in political purges, the vast penal and labor system, or in state-created famines. During World War II, as many as 20 million Soviet citizens died. In 1949, the U.S.S.R. developed its own nuclear arsenal.

First among its political figures was Lenin, leader of the Bolshevik Party and head of the first Soviet Government, who died in 1924. In the late 1920s, Josif Stalin emerged as General Secretary of the Communist Party of the Soviet Union (CPSU) amidst intraparty rivalries; he maintained complete control over Soviet domestic and international policy until his death in 1953. His successor, Nikita Khrushchev, served as Communist Party leader until he was ousted in 1964. Aleksey Kosygin became Chairman of the Council of Ministers, and Leonid Brezhnev was made First Secretary of the CPSU Central Committee in 1964, but in 1971, Brezhnev rose to become “first among equals” in a collective leadership. Brezhnev died in 1982 and was succeeded by Yuriy Andropov (1982-84), Konstantin Chernenko (1984-85), and Mikhail Gorbachev, who resigned as Soviet President on December 25, 1991. On December 26, 1991, the U.S.S.R. was formally dissolved .

In a dramatic speech in September 1993, President Yeltsin dissolved the Russian parliament and called for new national elections and a new constitution. The standoff between the executive branch and opponents in the legislature turned violent in October after supporters of the parliament tried to instigate an armed insurrection. Yeltsin ordered the army to respond with force to capture the parliament building (known as the White House) .

In December 1993, voters elected a new parliament and approved a new constitution that had been drafted by the Yeltsin government. In late 1994, the Russian security forces launched a brutal operation in the Republic of Chechnya against rebels who were intent on separation from Russia. Along with their opponents, Russian forces committed numerous violations of human rights. The Russian Army used heavy weapons against civilians .

After numerous unsuccessful attempts to institute a cease-fire, in August 1996 the Russian and Chechen authorities negotiated a settlement that resulted in a complete withdrawal of Russian troops and the holding of elections in January 1997. The Organization for Security and Cooperation in Europe (OSCE) played a major role in facilitating the negotiation. A peace treaty was concluded in May 1997. Following an August 1999 attack into Dagestan by Chechen separatists and the September 1999 bombings of two apartment buildings in Moscow, the federal government launched a military campaign into Chechnya. Russian authorities accused the Chechen government  of failing to stop the growth of the rebels activities and failure to curb widespread banditry and hostage taking in the republic. By Spring 2000, federal forces claimed control over Chechen territory, but fighting continues as rebel fighters regularly ambush Russian forces in the region .

The fate of Russia’s new neighbouring countries will depend on the fate of Russia itself. Russia sees this oil-rich area as a geo-politically important region. Moscow believes that Russian oil corporations and business circles should more intensively participate in the competitive battle for Caspian resources. Over recent years, the Kremlin has heavily amplified its pressure on Azerbaijan and Georgia, the only true pro-Western countries in the CIS area.

Ignoring Russian interests will therefore have dire consequences for such countries as Azerbaijan and Georgia, for Russia might easily manipulate ethnic factions within these two countries and use Nagorno-Karabakh and Abkhazia as leverage to restart wars in the conflict-torn areas. The only question, which is very far from a clear answer, however, is whether Russia will be able to make a valuable contribution toward promoting security and long-lasting peace in this unfolding and complex region .

Since the last decade of the twentieth century the strategic importance of the region has strangely enough put the small nations under pressure from the eternally ambitious but so far economically weak post-imperial Russia. Certainly, Russia has played until now and will continue to play an active role to remain engaged in the region. Moreover, the Kremlin very much wishes to restore the former Soviet Union with a new content that would gratify not only Russia’s interests, but also the entire ‘near abroad.’

4. Government And Political Conditions In Russia

In the political system established by the 1993 constitution, the president wields considerable executive power. There is no vice president, and the legislative is far weaker than the executive. The president nominates the highest state officials, including the prime minister, who must be approved by the Duma. The president can pass decrees without consent from the Duma. He also is head of the armed forces and of the national security council. What is most interesting in this context is that some American observers predict further development of the region under the domination of Russia.14 Russian military and political assertiveness in the former Soviet republics and even beyond is indeed growing.15 Despite Moscow’s desire to be one of the leading European democracies in the twenty-first century, Russia, it seems, will long remain faithful to its traditional policies of divide and rule.

Duma elections were on December 19, 1999 and presidential elections March 26, 2000. While the Communist Party won a narrow plurality of seats in the Duma, the pro-government party Unity and the centrist Fatherland-All Russia also won substantial numbers of seats in the legislature. In April 2002, the Communist Party lost eight top posts when the State Duma voted to reassign the chairmanships of nearly one-third of its committees, leaving greater power in the hands of centrist and liberal factions. In the presidential election of March 2000, Vladimir Putin, named Acting President following the December 31 resignation of Boris Yeltsin, was elected in the first round with 53% of the vote. Both the presidential and parliamentary elections were judged generally free and fair by international observers .

Russia is a federation, but the precise distribution of powers between the central government and the regional and local authorities is still evolving. The Russian Federation consists of 89 components, including two federal cities, Moscow and St. Petersburg. The constitution explicitly defines the federal government’s exclusive powers, but it also describes most key regional issues as the joint responsibility of the federal government and the Federation components .

5. Russia’s Economy And Change of The Economical Structure

Russia, however, appears to have weathered the crisis relatively well. Real GDP increased by the highest percentage since the fall of the Soviet Union , the ruble stabilized, inflation was moderate, and investment began to increase again. Russia is making progress in meeting its foreign debts obligations. During 2000-01, Russia not only met its external debt services but also made large advance repayments of principal on IMF loans but also built up Central Bank reserves with government budget, trade, and current account surpluses. The result was a rapid decline in the value of the ruble, flight of foreign investment, delayed payments on sovereign and private debts, a breakdown of commercial transactions through the banking system, and the threat of runaway inflation .

In 2003, the debt will rise to $19 billion due to higher Ministry of Finance and Eurobond payments. However, $1 billion of this has been prepaid, and some of the private sector debt may already have been repurchased. Russia continues to explore debt swap/exchange opportunities. This has meant that Russia has given back much of the terms-of-trade advantage that it gained when the ruble fell by 60% during the debt crisis. In 2001, the U.S. trade deficit with Russia was nearly $3.5 billion, down $2 billion compared to the 2000 deficit of $5.6 billion. U.S. goods exports to Russia were nearly $2.7 billion in 2001, a 30.2% increase from the level of U.S. exports in 2000. Russia was the 35th-largest market for U.S. exports in 2001 (39th in 2000). U.S. imports from Russia totaled $6.3 billion in 2001, a decrease of 18.3% from the 2000 import totals. Russia ranked 29th as a supplier of U.S. imports in 2001 (28th in 2000). The U.S. Senate ratified the Bilateral Investment Treaty (BIT) on October of the same year, but it cannot enter into force until the Duma ratifies it. The Duma did not actively consider ratification in 2001 .

The U.S. actively supports Russia’s efforts to join the World Trade Organization (WTO). on commercially viable terms. Russia is currently very active in the process of negotiating terms of accession to the WTO. It has hosted and attended many meetings and summits on the topic over the past few years. President Putin committed Russia to entering the WTO as early as 2003. The United States actively supported Russian membership in the Asia-Pacific Economic Cooperation (APEC) forum. Russia became a member of APEC in November 1998. Oil and gas dominate Russian exports, so Russia remains highly dependent upon the price of energy .

The 2002 budget estimates an inflation rate of 12%, but the World Bank predicts inflation will stay above 15% in 2002. Russia’s GDP, estimated at $287.9 billion at 2002 exchange rates, increased by 4.9% in 2001 compared to 2000. The exchange rate stabilized in 1999; after falling from 6.5 rubles/dollar in August 1998 to about 25 rubles/dollar by April 1999, one year later it had further depreciated only to about 28.5 rubles/dollar. As of June 2002, the exchange rate was 31.4 rubles/dollar, down from 29.2 rubles/dollar the year before. After some large spikes in inflation following the August 1998 economic crisis, inflation has declined steadily.

Much of this growth, which exceeded most expectations for the third consecutive year, was driven by consumption demand. Analysts remain skeptical that high rates of economic growth will continue, particularly since Russia’s planned budgets through 2005 assume that oil prices will steadily increase. Low oil prices would mean that the Russian economy would not achieve its projected growth. The contribution of fixed capital investment, an important contributor to growth in 1999, lost its importance in industrial growth .

Russia comprises roughly three-quarters of the territory of the former Soviet Union but has relatively little area suited for agriculture because of its arid climate and inconsistent rainfall. Northern areas concentrate mainly on livestock, and the southern parts and western Siberia produce grain. Restructuring of former state farms has been an extremely slow process. Oil and gas exports continue to be the main source of hard currency, but declining energy prices have hit Russia hard. Russia is a leading producer and exporter of minerals, gold, and all major fuels. Natural resources, especially energy, dominate Russian exports. Ninety percent of Russian exports to the United States are minerals or other raw materials .

In 1999, investment increased by 4.5%, the first such growth since 1990. Investment growth has continued at high rates from a very low base, with an almost 30% increase in total foreign investments in 2001 compared to the previous year. Higher retained earnings, increased cash transactions, the positive outlook for sales, and political stability have contributed to these favorable trends. Over the medium-to-long term, Russian companies that do not invest to increase their competitiveness will find it harder either to expand exports or protect their recent domestic market gains from higher quality imports .

Foreign direct investment, which includes contributions to starting capital and credits extended by foreign co-owners of enterprises, rose slightly in 1999 and 2000, but decreased in 2001 by about 10%. Foreign portfolio investment, which includes shares and securities, decreased dramatically in 1999, but has experienced significant growth since then. In 2001, foreign portfolio investment was $451 million, more than twice the amount from the previous year. Inward foreign investment during the 1990s was dwarfed by Russian capital flight, estimated at about $15 billion annually. During the years of recovery following the 1998 debt crisis, capital flight seems to have slowed. Inward investment from Cyprus and Gibraltar, two important channels for capital flight from Russia in recent years, suggest that some Russian money is returning home .

A significant drawback for investment is the banking sector, which lacks the resources, the capability, and the trust of the population that it would need to attract substantial savings and direct it toward productive investments. Russia’s banks contribute only about 3% of overall investment in Russia. Sberbank receives preferential treatment from the state and holds 73% of all bank deposits. It also is the only Russian bank that has a federal deposit insurance guarantee. Most analysts predict these trade trends will continue to some extent in 2002. In the first quarter of 2002, import expenditures were up 12%, increased by goods and a rapid rise of travel expenditure. The combination of import duties, a 20% value-added tax and excise taxes on imported goods (especially automobiles, alcoholic beverages, and aircraft) and an import licensing regime for alcohol still restrain demand for imports. Frequent and unpredictable changes in customs regulations also have created problems for foreign and domestic traders and investors. In March 2002, Russia placed a ban on poultry from the United States. In the first quarter of 2002, exports were down 10% as falling income from goods exports was partly compensated for by rising services exports, a trend since 2000. The trade surplus decreased to $7 billion from well over $11 billion the same period last year .

Library of Congress. Through FY 2001, the Open World Russian Leadership Program has brought more than 3,700 Russians from throughout Russia to the United States for short-term study tours, including up to 150 members of the Russian Parliament for meetings with their counterparts in the U.S. Congress. Since 1992, over 600 Russians have traveled to the United States under these two programs . The Foundation’s grants have been targeted in three main programmatic areas: private enterprise development, civil society and public administration, and policy. The Foundation also has implemented targeted grant initiatives to address specific issues, such as media development and economics research . Principal U.S. imports–platinum, oil, aluminum, woven apparel, crab, iron/steel, knit apparel, fertilizers, diamonds, plywood, vodka .

6. Constitution And Law In Russian Federation

Russia’s judiciary and justice system are weak. Numerous matters which are dealt with by administrative authority in European countries remain subject to political influence in Russia. The Constitutional Court was reconvened in March 1995 following its suspension by President Yeltsin in October 1993. The 1993 constitution empowers the court to arbitrate disputes between the executive and legislative branches and between Moscow and the regional and local governments. The court also is authorized to rule on violations of constitutional rights, to examine appeals from various bodies, and to participate in impeachment proceedings against the president. Lack of legislation and, where there is legislation, lack of effective law enforcement, in many areas of economic activity is a pressing issue. Nonetheless, taxation and business regulations are unpredictable, and legal enforcement of private business agreements is weak .

The July 1994 Law on the Constitutional Court prohibits the court from examining cases on its own initiative and limits the scope of issues the court can hear. In the past few years, the Russian Government has begun to reform the criminal justice system and judicial institutions, including the reintroduction of jury trials in certain criminal cases. Despite these efforts, judges are only beginning to assert their constitutionally mandated independence from other branches of government .

The Duma passed a Criminal Procedure Code and other judicial reforms during its 2001 session. Russia’s human rights record remains uneven and worsened in some areas. There have been credible allegations of violations of international human rights and humanitarian law by Russian forces. Chechen groups also have committed abuses .

Although the government has made progress in recognizing the legitimacy of international human rights standards, the institutionalization of procedures to safeguard these rights has lagged. Implementation of the constitutional provisions for due process and timely trials, for example, has made little progress. On September 13, 2001, the Presidium of the Supreme Court dismissed the prosecution’s last appeal against the December 29, 1999 acquittal of Nikitin. Nonetheless, serious problems remain .

The judiciary is often subject to manipulation by political authorities and is plagued by large case backlogs and trial delays. Lengthy pretrial detention remains a serious problem. Russia has the highest prison population rate in the world, at 685 per 100,000. There are credible reports of beating and torturing of inmates and detainees by law enforcement and correctional officials. Human rights groups estimate that about 11,000 inmates and prison detainees die annually, most because of overcrowding, disease, and lack of medical care. In 2001, President Putin pronounced a moratorium on the death penalty. However, there are reports that the Russian Government might still be violating promises they made upon entering the European Council, especially in terms of prison control and conditions. Human rights groups are very critical of cases of Chechens disappearing in the custody of Russian officials. The Russian Constitution provides for freedom of religion and the equality of all religions before the law as well as the separation of church and state. Although Jews and Muslims continue to encounter prejudice and societal discrimination, they have not been inhibited by the government in the free practice of their religion. High-ranking federal officials have condemned anti-Semitic hate crimes, but law enforcement bodies have not effectively prosecuted those responsible. In response, the Duma passed a new, restrictive, and potentially discriminatory law in October 1997. Some local officials, however, have used the law as a pretext to restrict religious liberty .

The constitution guarantees citizens the right to choose their place of residence and to travel abroad. Some big-city governments, however, have restricted this right through residential registration rules that closely resemble the Soviet-era “propiska” regulations. Although the rules were touted as a notification device rather than a control system, their implementation has produced many of the same results as the propiska system. Attitudes left over from the Soviet period will take many years to overcome. Government decisions affecting business have often been arbitrary and inconsistent. Crime has increased costs for both local and foreign businesses. On the positive side, Russian businesses are increasingly turning to the courts to resolve disputes. The passage of an improved bankruptcy code in January 1998 was one of the first steps. In 2001, the Duma passed legislation for positive changes within the business and investment sector; the most critical legislation was a deregulation package. This trend in legislation is continued through 2002, with the new corporate tax code going into effect .

7. NATO – Russia Relations

The NATO-Russia Council (NRC) was established in May 2002, reflecting the transformed relationship between Russia and NATO. The NRC provides opportunities for consultation, joint decision, and joint action on a wide range of issues. Some of the areas for projects are assessment of the terrorist threat, crisis management, non-proliferation, arms control and confidence-building measures, theater missile defense, search and rescue at sea, military-to-military cooperation, defense reform, civil emergency response, and new threats and challenges (including scientific cooperation and airspace management). NATO/Russia Founding Act. Russia signed the NATO Partnership for Peace initiative in June 1994. Cooperation between NATO and Russia exists in scientific and technical fields .

The United States and Russia signed a memorandum of understanding on defense cooperation in September 1993 that institutionalized and expanded relations between defense ministries, including establishing a broad range of military-to-military and academic contacts.

The United States and Russia carried out a joint peacekeeping training exercise in Totskoye, Russia, in September 1994. Based on the January 14, 1994, agreement between Presidents Clinton and Yeltsin, the two nations stopped targeting their strategic nuclear missiles at each other as of May 30, 1994. U.S. and Russian security cooperation emphasizes strategic stability, nuclear safety, dismantling nuclear weapons, preventing proliferation of weapons of mass destruction and their delivery systems, and enhancing military-to-military contacts. In December 2001, the United States announced its withdrawal from the 1972 ABM Treaty, citing the September 11 attacks and the new threats faced. The United States officially withdrew from the treaty on June 13, 2002, making the treaty defunct. However, the United States continued to negotiate with Russia on reducing both countries’ strategic nuclear arsenals.

Russia has taken important steps to become a full partner in the world’s principal political groupings. On December 27, 1991, Russia assumed the seat formerly held by the Soviet Union in the UN Security Council. Russia also is a member of the Organization for Security and Cooperation in Europe (OSCE) and the North Atlantic Cooperation Council (NACC). It signed the NATO Partnership for Peace initiative on June 22, 1994. On May 27, 1997, NATO and Russia signed the NATO-Russia Founding Act, which provides the basis for an enduring and robust partnership between the Alliance and Russia–one that can make an important contribution to European security architecture in the 21st century. This agreement was superseded by the NATO-Russia Council that was agreed at the Reykjavik Ministerial and unveiled at the Rome NATO Summit in May 2002. On June 24, 1994, Russia and the European Union (EU) signed a partnership and cooperation agreement. Russia has played an important role in helping mediate international conflicts and has been particularly actively engaged in trying to promote a peace following the conflict in Kosovo .

A large number of state-owned defense enterprises are on the brink of collapse as a result of cuts in weapons orders and insufficient funding to shift to production of civilian goods, while at the same time trying to meet payrolls .

Following September 11, the U.S.-Russia relationship  has made a giant leap forward. Russia is a critical member of the international coalition against terror. The United States remains committed to maintaining a constructive relationship with Russia in which it seeks to expand areas of cooperation and effectively work through differences. The United States continues to support Russia’s political and economic transformation and its integration into major international organizations. These steps, in conjunction with achievements in considerably reducing nuclear weapons, have greatly enhanced the security of the United States. Russia’s struggling arms producers will, therefore, intensify their efforts to seek sales to foreign governments. About 70% of the former Soviet Union’s defense industries are located in the Russian Federation .

The intensity and frequency of contacts between President Putin and President Bush, most recently the Moscow/St. Petersburg-Summit in May 2002, are indicative of the strong commitment to working together on a broad range of issues. These include European security, counter-terrorism, reducing the threat to our countries posed by weapons of mass destruction, and economic cooperation, especially American investment in Russia. All parties to the treaty have been successful in meeting the treaty’s reduction requirements . Presidents Bush and Putin signed the Moscow Treaty on Strategic Offensive Reductions on May 24, 2002 during the Moscow/St. Petersburg Summit. This treaty is part of a strategic framework that the United States and Russia have established, which includes political, economic, and security areas. The Treaty must be approved and ratified by the U.S. Senate and the two Chambers of the Russian Federal Assembly. START I continues in force unchanged .

The adapted treaty takes account of the changes in Europe since CFE was signed. Politically, the process of adaptation has played a pivotal role in managing Russian concerns and expectations regarding NATO enlargement, through both the Madrid and Washington NATO Summits. Through CTR assistance, the United States is assisting Russia to meet START elimination levels earlier than Russia could do so unassisted .

In Russia, CTR has helped to upgrade the security and safety of nuclear weapons transport vehicles; is improving safeguards for fissile material; assisting with the design and construction of a secure, central storage facility for fissile material from dismantled nuclear weapons; providing assistance to eliminate Russian ICBM s, SLBMs, and strategic bombers; assisting with planning for destruction of chemical weapons and evaluating possible destruction technology; and supporting conversion of weapons of mass destruction to civilian production.

The United States also is assisting Russia in the development of export controls, providing emergency response equipment and training to enhance Russia’s ability to respond to accidents involving nuclear weapons, and attempting to increase military-to-military contacts. Cumulative U.S. Assistance Figures. Since 1992, the U.S. Government has allocated more than $10.8 billion in grant assistance to Russia, funding a variety of programs in four key areas: security programs, humanitarian assistance, economic reform, and democratic reform .

The United States will need to remain engaged throughout this process, and therefore U.S. assistance emphasizes activities that promote the establishment of lasting ties between Russians and Americans at all levels of society. Over the past few years, the U.S. assistance program has moved away from technical assistance to the central government, although such assistance is still provided when it is appropriate and will help to advance reform. An increasing proportion of U.S. assistance is focused at the regional and municipal level, where programs are helping to build the infrastructure of a market economy, remove impediments to trade and investment, and strengthen civil society .

In general, U.S. assistance programs in Russia are working at the grassroots level by bolstering small business through training and enhanced availability of credit; expanding exchanges so that more Russian citizens can learn about America’s market democracy on a first-hand basis .

Since the September 1, 2001 terrorist attacks, cooperation in anti-terrorism efforts increased between the United States and Russia. While the Administration’s “Review of Nonproliferation Assistance to Russia” in FY 2001 resulted in changes to some U.S. security programs, the high priority of security assistance was reconfirmed in this review and is reflected in increased FY 2002 funding to nearly $1 billion . The total value of all Department of State humanitarian commodities provided in FY 2002 is expected to be about $15 million. Additionally, through the Rostropovich Foundation, the U.S. Department of Agriculture (see below) is executing a food aid program in Russia that has a total value of nearly $10 million .

Increasingly, U.S. Government-funded economic reform programs are focused in Russia’s regions. A limited amount of assistance is targeted at promoting reforms at the national level, particularly with regard to tax administration and Russia’s efforts to accede to the World Trade Organization (WTO).

Democratic reform programs are helping Russians develop the building blocks of a democratic society based on the rule of law  by providing support to non-governmental organizations (NGOs), independent media, the judiciary, and other key institutions.

To support this long-term generational transition, the U.S. Government is increasingly promoting links between U.S. and Russian communities and institutions, including universities, hospitals, and professional associations, and is establishing public-access Internet sites throughout Russia. In addition, the U.S. Government  is helping Russia combat crime and corruption through cooperation with U.S. law enforcement agencies and community-based groups. A 2001 interagency review of U.S. assistance to Russia, initiated by the National Security Council (NSC) and conducted by the Department of State and NSC, recommended greater focus on supporting entrepreneurs, strengthening civil society and independent media, and improving Russians’ health. Special emphasis also was given to working with Russia’s younger generation . Over time, it is hoped that these regions will achieve broad-based economic growth, attract outside investment, and build a strong civil society, and that they will participate in efforts to disseminate their experience to other regions of Russia. Three RI sites are operating in Samara, Tomsk, and Khabarovsk/Sakhalin in the Russian Far East. A fourth site, in Novgorod, was graduated successfully in early 2001 .

Assistance provided includes supercontainers, railcar upgrades, emergency support equipment, automated inventory control and management systems, computer modeling, a personnel reliability program, 50 sets of “quick-fix” fencing and sensors for storage sites, and the development of a Security Assessment and Training Center to test and evaluate new security systems for storage sites .

Under the highly enriched uranium agreement, the United States is purchasing uranium from Russian weapons for use in U.S. power reactors . The United States has provided assistance to Russia to help it develop more effective export control and border security systems and capabilities in order to prevent, deter, and detect the potential proliferation of weapons of mass destruction and associated materials across Russia’s vast borders. The objective is to help Russia build export control institutions, infrastructure, and legislation to help prevent weapons proliferation. The State Department funds this assistance, which is carried out by experts from the Departments of Commerce, Energy, and the U.S. Customs Service .

To date, the ISTC has funded more than 500 projects involving more than 21,000 Russian scientists . In Russia, CRDF awarded $7.2 million in Competitive Grants to Russian projects in FY 2001, made 84 Travel Grants to Russian scientists and initiated 11 new “Next Steps to the Market” Grant Program awards . IPP provides seed funds for the identification and maturation of technology and facilitates interactions between U.S. industry and NIS institutes for developing industrial partnerships, joint ventures, and other mutually beneficial arrangements .

NCI is helping to create the conditions under which new jobs can be created through economic diversification  in these closed cities .

8. Putin’s Power Expanding In Russia Government

Russian Federation President Vladimir Putin spent his first year in power concentrating on reforms meant to strengthen centralized authority and introduce a federal system. The recent reshuffle he carried out in the Cabinet, and an address he made in that regard to the Federal Assembly, are important clues as to what his priorities will be from now on. Putin’s second year in power started with the Russian administration undertaking a fundamental restructuring of its national security priorities . On March 28, 2001 Putin replaced his defense minister, interior minister and atomic energy minister, as well as the Security Council head and the head of the Russian Federal Tax Police Service (FSNP) . These changes were not solely confined to senior officials, as medium-raking officials in these ministries and organizations also were on the end of this swift reshuffle. According to Putin, these replacements are nothing but the demilitarization of social life of Russia. But one could think of the reshuffle in broader terms. The reshuffle has far wider implications .

First of all, the demilitarization of security organizations, as Putin puts it, by no means implies that these organizations will now be accessible by society and be the subject to its supervision. On the contrary, what the recent replacements means is that the total control of these organizations and ministries have now been taken over by President Putin. What Putin managed to do through this security reshuffle was sweep away the cadres handed down from former President Boris Yeltsin, which  in turn paved the way for him to bring his own officials to key state offices and strengthen his grip on power. Putin did not have his own officials when he first came to power more then a year ago. Aware of this, he set about installing a group comprised of his associates from St. Petersburg and those politicians he created for himself to key state offices as soon as possible. But, at the same time, he had to work with those, who were still under the influence of “Yeltsin’s family” in other state organizations. Putin was at first not inclined to confront the “family” directly and, therefore, he avoided changes within the Cabinet. The recent move to replace the heads of key strategic national security organizations was a clear deviation from this previous stance on his part. The new names replacing the old ones were those directly loyal to him .

If it is already clear that one of the consequences of the Cabinet reshuffle was a weakening of the Atomic Energy Ministry, and most especially the Security Council. Now the question on the minds of many is whether the establishment of Putin’s control over the military and national security institutions, to the exclusion of the family, will result in parallel changes in other parts of the state administration. The family’s associates are numerous within the Cabinet, as well as in several institutions of the state, ranging from Prime Minister Mikhail Kasianov to Presidential Office head Alexander Voloshin .

If Putin continues with his efforts to get rid of Yeltsin’s legacy , that means that replacements will continue in other state and Cabinet offices and such state bodies, like presidential administration, will lose significance. Yevgeny Adamov, a member of Yeltsin’s family, known for causing Putin the occasional headache, tended to show excessive enthusiasm  to sell nuclear energy and technology to Iran, and as well as seeking the establishment of a nuclear reactor in that country .

One should also carefully note that the appointment of Sergey Ivanov, the former Security Council secretary, as Russia’s new defense minister was not only an attempt on the part of Putin to extend his authority over the security apparatus of the state, but as a wise move to undermine the political weight of Ivanov. His political powers had grown so much that he was begun to be seen as the number two in the Russian  state by both Russian and Western observers. The Security Council was transformed into one of the most effective decision-making bodies in Russia over the last few years under Ivanov’s leadership. His appointment a the new defense minister has the effect of both weakening his political power, and narrowing his room for political maneuver, as well as limiting the role of the Security Council in handling the situation in the Northern Caucasus, where Russian forces have yet to establish complete supremacy over Chechen fighters, as Putin wants .

The appointment of KGB-origin Ivanov as the new defense minister was, in a sense, a blow to military circles who were trying to maintain their influence in the formulation of defense policy. The Russian army has long needed to modernize its forces end comprehensively reduce its personnel numbers to be more effective end dynamic. Ivanov’s appointment was important in the sense that it blocks the way, to a considerable extent, of the military to act as an obstacle to those military reforms that are considered vital in the eyes of Putin. Former Defense Minister Sergeyev was himself a major obstacle for the implementation of such comprehensive reforms. The new minister, Ivanov, on the other hand, designed many of these important reforms, and is a staunch proponent of the modernization of the army. For this reason, one may evaluate Ivanov’s appointment as the new defense as a sign that comprehensive military reforms might soon get underway in Russia. Now, after Putin has established total control over security offices, the gates for reform in the realm of  justice has been opened. As for Putin’s annual address to the Federal Parliament  of the Russian Federation, the president gave an account of both what he has done within the first year since his coming to power and a set of projects he is considering to put into force in the short term. He said that due to the administrative reforms starting last year Russian state had become much more stronger and disintegration of the federation had been prevented .

It is important that Putin devoted almost half of this speech to Russia’s economic problems and the ways to solve them. While implicitly directing criticism at the Cabinet and the state bureaucracy, Putin touched on a number of economic reforms planned to go into force in 2001. The enactment of a law of land, new arrangements governing customs regulations, an overhaul of the budgetary system and the lifting of limitations on export earnings are all among the reforms Putin envisages for 2001. That indicates an emphasis on the continuation of liberal economic reforms as well as that Putin will be more active in the economic field this year .

CONCLUSION

Russia is very important in the point of being study-area (case study) on economical and political transformation experiment for economists and politics researchers. Because, Russia has lived big transformation from Socialist structure to Capitalist structure. Everytime, the transformation has bring problems for transformed structure. If this problems has solve, it may be dispersion of this structure(decentralization).

Putin’s economical and political approach and praxis in Rusia is important on this theme. Because, with this approach Russia was recontrived by Putin’s government. Actually, Russian society has transformed the process of changing from U.S.S.R. to Russian Federation in economical and political environment. Especially, the changing is very noticable at the period of Vladimir Putin’s government. V.Putin has took within becoming lose (unravelled) and re-structured the Russian Federation. What’s the difference of Putin’s government. The difference of Putin’s administration is related to included having core staff and to controlling to process of the transformation.

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Author Information:

•    Elnur MIKAYILOV; Expert in International Relations
•    Ph. D. Student at Institute of Social Sciences, Department of History, Selcuk University, Campus, 42075 Konya / TURKEY
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