RL33407
Russia
May 08, 2006

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Summary

Vladimir Putin won reelection as President in March 2004, in an exercise in "managed democracy" in which he took 71% of the vote and faced no serious competition. The pro-Putin Unified Russia party similarly swept the parliamentary election in December 2003 and controls more than two-thirds of the seats in the Duma. Putin's twin priorities remain to revive the economy and strengthen the state. He has brought TV and radio under tight state control and virtually eliminated effective political opposition. Federal forces have suppressed large-scale military resistance in Chechnya but face the prospect of prolonged guerilla warfare and terrorist style attacks. The economic upturn that began in 1999 is continuing. The GDP and domestic investment are growing impressively after a long decline, inflation is contained, the budget is balanced, and the ruble is stable. Major problems remain: 18% of the population live below the poverty line, foreign investment is low, and crime, corruption, capital flight, and unemployment remain high. Putin apparently seeks simultaneously to tighten political control and accelerate economic reform. Russian foreign policy has grown more assertive, fueled in part by frustration over the gap between Russia's self-image as a world power and its greatly diminished capabilities. Russia's drive to reassert dominance in and integration of the former Soviet states is most successful with Belarus and Armenia but arouses opposition in Georgia, Ukraine, Azerbaijan, and Moldova. The Commonwealth of Independent States as an institution is failing. Washington and Moscow continue to disagree over Russian nuclear reactor sales to Iran, among other issues. After the September 11, 2001 attacks, however, Russia adopted a more cooperative attitude on many issues. The military is in turmoil after years of severe force reductions and budget cuts. The armed forces now number about one million, down from 4.3 million Soviet troops in 1986. Weapons procurement is down sharply. Readiness, training, morale, and discipline have suffered. Putin's government has increased defense spending sharply but there is conflict between the military and the government and within the military over resource allocation, restructuring, and reform. After the Soviet Union's collapse, the U.S. sought a cooperative relationship with Moscow and supplied over $4 billion in grant aid to encourage democracy, market reform, and WMD threat reduction in Russia. Early hopes for a close partnership waned however, due to mutual disillusionment. Direct U.S. foreign aid to Russia, under congressional pressure, fell in the past decade. Indirect U.S. aid, however, through institutions such as the IMF, was substantial. The U.S. has imposed economic sanctions on Russian organizations for exporting military technology and equipment to Iran and Syria, and more restrictions on aid to Russia are in the FY2006 foreign aid bill. In the spirit of cooperation after September 11, however, the two sides agreed on a strategic nuclear force reduction treaty and a strategic framework for bilateral relations, signed at the Bush-Putin summit in May 2002. This CRS report replaces CRS Issue Brief IB92089, Russia, by Stuart Goldman.

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