Russia

The difficult socioeconomic conditions Russia has endured since the fall of the Soviet Union are reflected in the health of today’s conscripts. (...) Extreme efforts are considered necessary to keep the troops in order, and increasingly this entails use of extreme violence. (...) The Russian leadership will have to seriously invest in the safety, livelihood, and quality of its men...

Assessments of Russia’s civil society development have been almost universally negative, yet the assessments are usually based on very limited and unsystematic evidence. Missing from the discussion are new developments such as institutions and competitive funding for NGOs and other civic groups that suggest there is a foundation in Russia to support citizen participation in governance. Future analysis should investigate, systematically and objectively, the positive and negative impacts of these developments.

The Russian policymakers had enough financial resources ($600 billion with the Central Bank of Russia) to manage the cost of a bailout package of $200 billion at 13 percent of GDP. It was used to support the declining ruble toward the end of 2008 and early 2009, to provide some funding to the oligarchs so that they could repay their hard currency loans, and above all to provide cash to the banks. With improving oil prices, the situation has improved for the budget, and the CBR reserves have moved up to $400 billion from a low $300 billion last December. But unemployment has been edging up and inflation still remains high at annual 7 percent. It limits the ability of the policymakers to mount another stimulus for helping the unemployed. The main problem however consists in diversifying the economy away from commodities (among them oil and natural gas) and dealing with massive corruption in the system. Russian President Medvedev described Russia as a "corrupt, raw-material based economy." That will be the challenge facing the policy makers in the years ahead.

The article analyzes the past, the present and the future of the global expansion of Russian oil and gas companies. During Socialism, geopolitical considerations were the main driver of overseas activities of the Soviet energy enterprises. During the 90s, given the maturing resource base of the oil sector, the going-abroad efforts of privatized Russian oil companies, mainly LUKOIL, in the upstream were aimed at acquiring promising assets in countries with lower production costs. Oilmen were also trying to get a foothold in the European downstream to improve their global competitiveness. Gazprom was expanding its presence in Europe which was essential for the company that suffered from non-payments in Russia. At the same time, LUKOIL and Gazprom helped Russia to maintain its influence over the former USSR republics. During the 2000s, with the growing étatisation of the energy sector in Russia, economic aspects of oil and gas companies’ global expansion became interlinked with geopolitical motives and the desire to reestablish the country as an energy power.