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Summary

Dmitry Medvedev, Putin's chosen successor and long-time protege, was elected President of the Russian Federation on March 2, 2008 with about 70% of the vote. Medvedev, formerly First Deputy Prime Minister, announced during the campaign that if elected, he would propose Putin as Prime Minister. Medvedev was inaugurated as President on May 7; Putin was confirmed as Prime Minister the next day. The Kremlin's Unified Russia party had previously swept the parliamentary election (December 2, 2007), winning more than two-thirds of the seats in the Duma. U.S. and EU observers criticized both elections as unfairly controlled by the governing authorities. Nevertheless, Putin's widespread popularity in Russia led many to conclude that the election results corresponded to Russian public opinion. The economic upturn that began in 1999 is continuing. The GDP, domestic investment, and the general living standard have been growing impressively after a decade-long decline, fueled in large part by profits from oil and gas exports. There is a budget surplus, and the ruble is stable. Some major problems remain: 15% of the population live below the poverty line; foreign investment is relatively low; inflation is rising; and crime, corruption, capital flight, and unemployment remain high. The Russia-Georgia conflict is the most serious clash between Russia and the United States since the end of the Cold War. Despite rising tension on issues such as NATO enlargement, Kosovo, and proposed U.S. missile defenses in Eastern Europe, Washington and Moscow had found some common ground on the Iranian and North Korean nuclear concerns and on nuclear non-proliferation in general. Russia's actions in Georgia, however, could be a turning point in U.S.-Russian relations. Russia's actions also arouse anxiety in other Soviet successor states, especially those with large Russian minorities, such as Ukraine and Kazakhstan. Russia's military has been in turmoil after years of severe force reductions and budget cuts. The armed forces now number about 1.2 million, down from 4.3 million Soviet troops in 1986. Readiness, training, morale, and discipline have suffered. Russia's economic revival has allowed Putin to increase defense spending. Major weapons procurement, which virtually stopped in the 1990s, has begun to pick up. Some high-profile activities such as multi-national military exercises, Mediterranean and Atlantic naval deployments, and strategic bomber patrols, have resumed. After the Soviet Union's collapse, the United States sought a cooperative relationship with Moscow and supplied over $14 billion to encourage democracy and market reform, for humanitarian aid, and for WMD threat reduction in Russia. Direct U.S. foreign aid to Russia under the Freedom Support Act fell in the past decade, due in part to congressional pressure. U.S. aid in the form of WMD threat reduction programs, and indirect U.S. aid through institutions such as the IMF, however, was substantial. The United States has imposed economic sanctions on the Russian government and on Russian organizations for exporting nuclear and military technology and equipment to Iran and Syria. There are restrictions on aid to Russia in the FY2008 foreign aid bill. This CRS report will be updated regularly.

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