Abstract

After a dismal record of retrenchment during the 1990s, the Russian economy has shown major signs of recovery over the past four years, which has resulted primarily from a combination of prudent fiscal and monetary policies, positive external developments, the depreciation of the ruble and the conduct of investor-friendly structural reforms. The Russian economy, however, still faces various weaknesses, namely the heavy reliance on energy exports, delay in structural reforms, a strong role of the public sector in the economy… These difficulties have prevented the emergence of a dynamic small and medium-sized enterprise sector that would provide the necessary support for growth and has resulted in low levels of foreign direct investment, although both trends seem to be changing for the better. The arrest of oil magnate M. Khodorkovsky in October 2003 has created great concerns among the liberal and business elite as to the future of Russian democracy and economic reforms. Despite President Putin’s assurances regarding his commitment to democracy and economic reform and the continued robust performance of the economy doubts among the general public and the business community remain.

Domitilla Sagramoso is a Research Fellow at the Centre for Defence Studies, King’s College London, specializing on foreign policy and security issues affecting Russia, Central Asia and the Caucasus.