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Russia-Privatization





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The essence of economic restructuring, and a critical consideration for foreign loans and investment in Russia's economy, is the privatization program. In most respects, between 1992 and 1995 Russia kept pace with or exceeded the rate established in the original privatization program of October 1991. As deputy prime minister for economic policy, the reformist Chubays was an effective advocate of privatization during its important early stages. In 1992 privatization of small enterprises began through employee buyouts and public auctions. By the end of 1993, more than 85 percent of Russian small enterprises and more than 82,000 Russian state enterprises, or about one-third of the total in existence, had been privatized.

On October 1, 1992, vouchers, each with a nominal value of 10,000 rubles (about US$63), were distributed to 144 million Russian citizens for purchase of shares in medium-sized and large enterprises that officials had designated and reorganized for this type of privatization. However, voucher holders also could sell the vouchers, whose cash value varied according to the economic and political conditions in the country, or they could invest them in voucher funds.

By the end of June 1994, the voucher privatization program had completed its first phase. It succeeded in transferring ownership of 70 percent of Russia's large and medium-sized enterprises to private hands and in privatizing about 90 percent of small enterprises. By that time, 96 percent of the vouchers issued in 1992 had been used by their owners to buy shares in firms directly, invest in investment funds, or sell on the secondary markets. According to the organizers of the voucher system, some 14,000 firms employing about two-thirds of the industrial labor force had moved into private hands.

The next phase of the privatization program called for direct cash sales of shares in remaining state enterprises. That phase would complete the transfer of state enterprises and would add to government revenues. After that procedure met stiff opposition in the State Duma, Yeltsin implemented it by decree in July 1994. But the president's commitment to privatization soon came into question. In response to the monetary crisis of October 1994, Yeltsin removed Chubays from his position as head of the State Committee for the Management of State Property, replacing him with little-known official Vladimir Polevanov. Polevanov stunned Russian and Western privatization advocates by suggesting renationalization of some critical enterprises. Yeltsin reacted by replacing Polevanov with Petr Mostovoy, a Chubays ally. In the ensuing eighteen months, Yeltsin made two more changes in the chairmanship position.

In 1995 and 1996, political conditions continued to hamper the privatization program, and corruption scandals tarnished the program's public image. By 1995 privatization had gained a negative reputation with ordinary Russians, who coined the slang word prikhvatizatsiya , a combination of the Russian word for "grab" and the Russianized English word "privatize," producing the equivalent of "grabification." The term reflects the belief that the privatization process most often shifted control of enterprises from state agencies to groups of individuals with inside connections in the Government, the mafiya , or both. Distrust of the privatization process was part of an increasing public cynicism about the country's political and economic leaders, fueled by the seeming failure of Yeltsin's highly touted reform to improve the lot of the average Russian (see Social Stratification, ch. 5).

The second phase of the privatization program went ahead with the sale of state-held shares for cash. Although the process was virtually complete by the end of the first quarter of 1996, the Government failed to garner expected revenues. Meanwhile, Yeltsin's June 1996 bid for reelection brought a virtual halt in privatization of state enterprises during the campaign period. In February 1996, the Procuracy announced a full-scale investigation into privatization practices, in particular a 1995 transaction in which state banks awarded loans to state firms in return for "privatization" shares in those enterprises (see The Procuracy, ch. 10). This loans-for-shares type of transaction characterized the second phase of privatization; banks provided the government badly needed cash based on the collateral of enterprise shares that banks presumably would be able to sell later. But most of the twenty-nine state enterprises originally slated to participate withdrew, and the banks that received shares appeared to have a conflict of interest based on their role in setting the rules of the bidding procedure. In the most widely publicized deal, the Uneximbank of Moscow received a 38 percent interest in the giant Noril'sk Nickel Joint-Stock Company at about half of a competing bid. Other banks and commercial organizations joined the traditional opponents of privatization in attacking the loans-for-shares program, and in 1996 the Government admitted that the program had been handled badly. As a result of corruption allegations, the State Duma formed a committee to review the privatization program. And Prime Minister Chernomyrdin requested off-budget funds to buy back shares from the banks.

Because the faults of the Yeltsin privatization program were an important plank in the 1996 presidential election platform of the Communist Party of the Russian Federation (Kommunisticheskaya partiya Rossiyskoy Federatsii--KPRF), the strongest opposition party, Yeltsin's campaign strategy was to reduce privatization as far as possible as a campaign issue (see The Executive Branch, ch. 7). Part of that strategy was to shift the privatization process from Moscow to the regions. In February 1996, a presidential decree simply granted shares in about 6,000 state-controlled firms to regional governments, which could auction the shares and keep the profits.

After Yeltsin's reelection in July 1996, his financial representatives announced continuation of the privatization program, with a new focus on selling ten to fifteen large state enterprises, including the joint-stock company of the Unified Electric Power System of Russia (YeES Rossii), the Russian State Insurance Company (Rosgosstrakh), and the St. Petersburg Maritime Port. The Communications Investment Joint-Stock Company (Svyazinvest), sale of which had failed in 1995, was to be offered to Western telecommunications companies in 1996.

The new, postelection privatization stage also was to reduce the role of enterprise workers in shareholding. Within the first years of such ownership, most worker shares had been sold at depressed prices, devaluing all shares and cutting state profits from enterprise sales. Therefore, to reach the budget target of 12.4 trillion rubles (about US$2.4 billion) of profit from privatization sales in 1996, distribution was to target recipients who would hold shares rather than sell them immediately.

Despite periodic delays, the inept administration of the program's more recent phases, and allegations of favoritism and corrupt transactions in the enterprise and financial structures, in 1996 international experts judged Russia's privatization effort a qualified success. The movement of capital assets from state to private hands has progressed without serious reversal of direction--despite periodic calls for reestablishing state control of certain assets. And the process has contributed to the creation of a new class of private entrepreneur.

Data as of July 1996



BackgroundFounded in the 12th century, the Principality of Muscovy, was able to emerge from over 200 years of Mongol domination (13th-15th centuries) and to gradually conquer and absorb surrounding principalities. In the early 17th century, a new Romanov Dynasty continued this policy of expansion across Siberia to the Pacific. Under PETER I (ruled 1682-1725), hegemony was extended to the Baltic Sea and the country was renamed the Russian Empire. During the 19th century, more territorial acquisitions were made in Europe and Asia. Defeat in the Russo-Japanese War of 1904-05 contributed to the Revolution of 1905, which resulted in the formation of a parliament and other reforms. Repeated devastating defeats of the Russian army in World War I led to widespread rioting in the major cities of the Russian Empire and to the overthrow in 1917 of the imperial household. The Communists under Vladimir LENIN seized power soon after and formed the USSR. The brutal rule of Iosif STALIN (1928-53) strengthened Communist rule and Russian dominance of the Soviet Union at a cost of tens of millions of lives. The Soviet economy and society stagnated in the following decades until General Secretary Mikhail GORBACHEV (1985-91) introduced glasnost (openness) and perestroika (restructuring) in an attempt to modernize Communism, but his initiatives inadvertently released forces that by December 1991 splintered the USSR into Russia and 14 other independent republics. Since then, Russia has shifted its post-Soviet democratic ambitions in favor of a centralized semi-authoritarian state whose legitimacy is buttressed, in part, by carefully managed national elections, former President PUTIN's genuine popularity, and the prudent management of Russia's windfall energy wealth. Russia has severely disabled a Chechen rebel movement, although violence still occurs throughout the North Caucasus.
LocationNorthern Asia (the area west of the Urals is considered part of Europe), bordering the Arctic Ocean, between Europe and the North Pacific Ocean
Area(sq km)total: 17,098,242 sq km
land: 16,377,742 sq km
water: 720,500 sq km
Geographic coordinates60 00 N, 100 00 E
Land boundaries(km)total: 20,241.5 km
border countries: Azerbaijan 284 km, Belarus 959 km, China (southeast) 3,605 km, China (south) 40 km, Estonia 290 km, Finland 1,313 km, Georgia 723 km, Kazakhstan 6,846 km, North Korea 17.5 km, Latvia 292 km, Lithuania (Kaliningrad Oblast) 227 km, Mongolia 3,441 km, Norway 196 km, Poland (Kaliningrad Oblast) 432 km, Ukraine 1,576 km

Coastline(km)37,653 km

Climateranges from steppes in the south through humid continental in much of European Russia; subarctic in Siberia to tundra climate in the polar north; winters vary from cool along Black Sea coast to frigid in Siberia; summers vary from warm in the steppes to cool along Arctic coast

Elevation extremes(m)lowest point: Caspian Sea -28 m
highest point: Gora El'brus 5,633 m
Natural resourceswide natural resource base including major deposits of oil, natural gas, coal, and many strategic minerals, timber
note: formidable obstacles of climate, terrain, and distance hinder exploitation of natural resources
Land use(%)arable land: 7.17%
permanent crops: 0.11%
other: 92.72% (2005)

Irrigated land(sq km)46,000 sq km (2003)
Total renewable water resources(cu km)4,498 cu km (1997)
Freshwater withdrawal (domestic/industrial/agricultural)total: 76.68 cu km/yr (19%/63%/18%)
per capita: 535 cu m/yr (2000)
Natural hazardspermafrost over much of Siberia is a major impediment to development; volcanic activity in the Kuril Islands; volcanoes and earthquakes on the Kamchatka Peninsula; spring floods and summer/autumn forest fires throughout Siberia and parts of European Russia
Environment - current issuesair pollution from heavy industry, emissions of coal-fired electric plants, and transportation in major cities; industrial, municipal, and agricultural pollution of inland waterways and seacoasts; deforestation; soil erosion; soil contamination from improper application of agricultural chemicals; scattered areas of sometimes intense radioactive contamination; groundwater contamination from toxic waste; urban solid waste management; abandoned stocks of obsolete pesticides
Environment - international agreementsparty to: Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Sulfur 85, Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Wetlands, Whaling
signed, but not ratified: Air Pollution-Sulfur 94
Geography - notelargest country in the world in terms of area but unfavorably located in relation to major sea lanes of the world; despite its size, much of the country lacks proper soils and climates (either too cold or too dry) for agriculture; Mount El'brus is Europe's tallest peak
Population140,041,247 (July 2009 est.)
Age structure(%)0-14 years: 14.8% (male 10,644,833/female 10,095,011)
15-64 years: 71.5% (male 48,004,040/female 52,142,313)
65 years and over: 13.7% (male 5,880,877/female 13,274,173) (2009 est.)
Median age(years)total: 38.4 years
male: 35.2 years
female: 41.6 years (2009 est.)
Population growth rate(%)-0.467% (2009 est.)
Birth rate(births/1,000 population)11.1 births/1,000 population (2009 est.)
Death rate(deaths/1,000 population)16.06 deaths/1,000 population (July 2009 est.)

Net migration rate(migrant(s)/1,000 population)0.28 migrant(s)/1,000 population (2009 est.)
Urbanization(%)urban population: 73% of total population (2008)
rate of urbanization: -0.5% annual rate of change (2005-10 est.)
Sex ratio(male(s)/female)at birth: 1.06 male(s)/female
under 15 years: 1.05 male(s)/female
15-64 years: 0.92 male(s)/female
65 years and over: 0.44 male(s)/female
total population: 0.86 male(s)/female (2009 est.)
Infant mortality rate(deaths/1,000 live births)total: 10.56 deaths/1,000 live births
male: 12.08 deaths/1,000 live births
female: 8.94 deaths/1,000 live births (2009 est.)

Life expectancy at birth(years)total population: 66.03 years
male: 59.33 years
female: 73.14 years (2009 est.)

Total fertility rate(children born/woman)1.41 children born/woman (2009 est.)
Nationalitynoun: Russian(s)
adjective: Russian
Ethnic groups(%)Russian 79.8%, Tatar 3.8%, Ukrainian 2%, Bashkir 1.2%, Chuvash 1.1%, other or unspecified 12.1% (2002 census)

Religions(%)Russian Orthodox 15-20%, Muslim 10-15%, other Christian 2% (2006 est.)
note: estimates are of practicing worshipers; Russia has large populations of non-practicing believers and non-believers, a legacy of over seven decades of Soviet rule
Languages(%)Russian, many minority languages

Country nameconventional long form: Russian Federation
conventional short form: Russia
local long form: Rossiyskaya Federatsiya
local short form: Rossiya
former: Russian Empire, Russian Soviet Federative Socialist Republic
Government typefederation
Capitalname: Moscow
geographic coordinates: 55 45 N, 37 35 E
time difference: UTC+3 (8 hours ahead of Washington, DC during Standard Time)
daylight saving time: +1hr, begins last Sunday in March; ends last Sunday in October
note: Russia is divided into 11 time zones
Administrative divisions46 oblasts (oblastey, singular - oblast), 21 republics (respublik, singular - respublika), 4 autonomous okrugs (avtonomnykh okrugov, singular - avtonomnyy okrug), 9 krays (krayev, singular - kray), 2 federal cities (goroda, singular - gorod), and 1 autonomous oblast (avtonomnaya oblast')
oblasts: Amur (Blagoveshchensk), Arkhangel'sk, Astrakhan', Belgorod, Bryansk, Chelyabinsk, Irkutsk, Ivanovo, Kaliningrad, Kaluga, Kemerovo, Kirov, Kostroma, Kurgan, Kursk, Leningrad, Lipetsk, Magadan, Moscow, Murmansk, Nizhniy Novgorod, Novgorod, Novosibirsk, Omsk, Orenburg, Orel, Penza, Pskov, Rostov, Ryazan', Sakhalin (Yuzhno-Sakhalinsk), Samara, Saratov, Smolensk, Sverdlovsk (Yekaterinburg), Tambov, Tomsk, Tula, Tver', Tyumen', Ul'yanovsk, Vladimir, Volgograd, Vologda, Voronezh, Yaroslavl'
republics: Adygeya (Maykop), Altay (Gorno-Altaysk), Bashkortostan (Ufa), Buryatiya (Ulan-Ude), Chechnya (Groznyy), Chuvashiya (Cheboksary), Dagestan (Makhachkala), Ingushetiya (Magas), Kabardino-Balkariya (Nal'chik), Kalmykiya (Elista), Karachayevo-Cherkesiya (Cherkessk), Kareliya (Petrozavodsk), Khakasiya (Abakan), Komi (Syktyvkar), Mariy-El (Yoshkar-Ola), Mordoviya (Saransk), North Ossetia (Vladikavkaz), Sakha [Yakutiya] (Yakutsk), Tatarstan (Kazan'), Tyva (Kyzyl), Udmurtiya (Izhevsk)
autonomous okrugs: Chukotka (Anadyr'), Khanty-Mansi (Khanty-Mansiysk), Nenets (Nar'yan-Mar), Yamalo-Nenets (Salekhard)
krays: Altay (Barnaul), Kamchatka (Petropavlovsk-Kamchatskiy), Khabarovsk, Krasnodar, Krasnoyarsk, Perm', Primorskiy [Maritime] (Vladivostok), Stavropol', Zabaykal'sk (Chita)
federal cities: Moscow [Moskva], Saint Petersburg [Sankt-Peterburg]
autonomous oblast: Yevrey [Jewish] (Birobidzhan)
Constitutionadopted 12 December 1993

Legal systembased on civil law system; judicial review of legislative acts; has not accepted compulsory ICJ jurisdiction

Suffrage18 years of age; universal
Executive branchchief of state: President Dmitriy Anatolyevich MEDVEDEV (since 7 May 2008)
head of government: Premier Vladimir Vladimirovich PUTIN (since 8 May 2008); First Deputy Premiers Igor Ivanovich SHUVALOV and Viktor Alekseyevich ZUBKOV (since 12 May 2008); Deputy Premiers Sergey Borisovich IVANOV (since 12 May 2008), Dmitriy Nikolayevich KOZAK (since 14 October 2008), Aleksey Leonidovich KUDRIN (since 24 September 2007), Igor Ivanovich SECHIN (since 12 May 2008), Sergey Semenovich SOBYANIN (since 12 May 2008), Aleksandr Dmitriyevich ZHUKOV (since 9 March 2004)
cabinet: Ministries of the Government or "Government" composed of the premier and his deputies, ministers, and selected other individuals; all are appointed by the president
note: there is also a Presidential Administration (PA) that provides staff and policy support to the president, drafts presidential decrees, and coordinates policy among government agencies; a Security Council also reports directly to the president
elections: president elected by popular vote for a four-year term (eligible for a second term); election last held 2 March 2008 (next to be held in March 2012); note - the term length was extended to six years in late 2008, to go into effect following the 2012 presidential election; there is no vice president; if the president dies in office, cannot exercise his powers because of ill health, is impeached, or resigns, the premier serves as acting president until a new presidential election is held, which must be within three months; premier appointed by the president with the approval of the Duma
election results: Dmitriy MEDVEDEV elected president; percent of vote - Dmitriy MEDVEDEV 70.2%, Gennady ZYUGANOV 17.7%, Vladimir ZHIRINOVSKY 9.4%, Andrey BOGDANOV 1.3%
Legislative branchbicameral Federal Assembly or Federalnoye Sobraniye consists of an upper house, the Federation Council or Sovet Federatsii (168 seats; as of July 2000, members appointed by the top executive and legislative officials in each of the 84 federal administrative units - oblasts, krays, republics, autonomous okrugs and oblasts, and the federal cities of Moscow and Saint Petersburg; serve four-year terms) and a lower house, the State Duma or Gosudarstvennaya Duma (450 seats; as of 2007, all members elected by proportional representation from party lists winning at least 7% of the vote; members elected by popular vote to serve four-year terms)
elections: State Duma - last held 2 December 2007 (next to be held in December 2011)
election results: State Duma - United Russia 64.3%, CPRF 11.5%, LDPR 8.1%, Just Russia 7.7%, other 8.4%; total seats by party - United Russia 315, CPRF 57, LDPR 40, Just Russia 38

Judicial branchConstitutional Court; Supreme Court; Supreme Arbitration Court; judges for all courts are appointed for life by the Federation Council on the recommendation of the president

Political pressure groups and leadersAssociation of Citizens with Initiative of Russia (TIGR); Confederation of Labor of Russia (KTR); Federation of Independent Labor Unions of Russia; Freedom of Choice Interregional Organization of Automobilists; Glasnost Defense Foundation; Golos Association in Defense of Voters' Rights; Greenpeace Russia; Human Rights Watch (Russian chapter); Institute for Collective Action; Memorial (human rights group); Movement Against Illegal Migration; Pamjat (preservation of historical monuments and recording of history); Russian Orthodox Church; Russian Federation of Car Owners; Russian-Chechen Friendship Society; SOVA Analytical-Information Center; Union of the Committees of Soldiers' Mothers; World Wildlife Fund (Russian chapter)
International organization participationAPEC, Arctic Council, ARF, ASEAN (dialogue partner), BIS, BSEC, CBSS, CE, CERN (observer), CIS, CSTO, EAEC, EAPC, EBRD, G-20, G-8, GCTU, IAEA, IBRD, ICAO, ICC, ICCt (signatory), ICRM, IDA, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM (observer), IPU, ISO, ITSO, ITU, ITUC, LAIA (observer), MIGA, MINURCAT, MINURSO, MONUC, NSG, OAS (observer), OECD (accession state), OIC (observer), OPCW, OSCE, Paris Club, PCA, PFP, SCO, UN, UN Security Council, UNCTAD, UNESCO, UNHCR, UNIDO, UNITAR, UNMIL, UNMIS, UNOCI, UNTSO, UNWTO, UPU, WCO, WFTU, WHO, WIPO, WMO, WTO (observer), ZC
Flag descriptionthree equal horizontal bands of white (top), blue, and red
note: the colors may have been based on those of the Dutch flag; despite many popular interpretations, there is no official meaning assigned to the colors of the Russian flag

Economy - overviewRussia ended 2008 with GDP growth of 5.6%, following 10 straight years of growth averaging 7% annually since the financial crisis of 1998. Over the last six years, fixed capital investment growth and personal income growth have averaged above 10%, but both grew at slower rates in 2008. Growth in 2008 was driven largely by non-tradable services and domestic manufacturing, rather than exports. During the past decade, poverty and unemployment declined steadily and the middle class continued to expand. Russia also improved its international financial position, running balance of payments surpluses since 2000. Foreign exchange reserves grew from $12 billion in 1999 to almost $600 billion by end July 2008, which include $200 billion in two sovereign wealth funds: a reserve fund to support budgetary expenditures in case of a fall in the price of oil and a national welfare fund to help fund pensions and infrastructure development. Total foreign debt is almost one-third of GDP. The state component of foreign debt has declined, but commercial short-term debt to foreigners has risen strongly. These positive trends began to reverse in the second half of 2008. Investor concerns over the Russia-Georgia conflict, corporate governance issues, and the global credit crunch in September caused the Russian stock market to fall by roughly 70%, primarily due to margin calls that were difficult for many Russian companies to meet. The global crisis also affected Russia's banking system, which faced liquidity problems. Moscow responded quickly in early October 2008, initiating a rescue plan of over $200 billion that was designed to increase liquidity in the financial sector, to help firms refinance foreign debt, and to support the stock market. The government also unveiled a $20 billion tax cut plan and other safety nets for society and industry. Meanwhile, a 70% drop in the price of oil since mid-July further exacerbated imbalances in external accounts and the federal budget. In mid-November, mini-devaluations of the currency by the Central Bank caused increased capital flight and froze domestic credit markets, resulting in growing unemployment, wage arrears, and a severe drop in production. Foreign exchange reserves dropped to around $435 billion by end 2008, as the Central Bank defended an overvalued ruble. In the first year of his term, President MEDVEDEV outlined a number of economic priorities for Russia including improving infrastructure, innovation, investment, and institutions; reducing the state's role in the economy; reforming the tax system and banking sector; developing one of the biggest financial centers in the world, combating corruption, and improving the judiciary. The Russian government needs to diversify the economy further, as energy and other raw materials still dominate Russian export earnings and federal budget receipts. Russia's infrastructure requires large investments and must be replaced or modernized if the country is to achieve broad-based economic growth. Corruption, lack of trust in institutions, and more recently, exchange rate uncertainty and the global economic crisis continue to dampen domestic and foreign investor sentiment. Russia has made some progress in building the rule of law, the bedrock of a modern market economy, but much work remains on judicial reform. Moscow continues to seek accession to the WTO and has made some progress, but its timeline for entry into the organization continues to slip, and the negotiating atmosphere has soured in the wake of the Georgia and global economic crises.
GDP (purchasing power parity)$2.271 trillion (2008 est.)
$2.151 trillion (2007 est.)
$1.99 trillion (2006 est.)
note: data are in 2008 US dollars
GDP (official exchange rate)$1.677 trillion (2008 est.)
GDP - real growth rate(%)5.6% (2008 est.)
8.1% (2007 est.)
7.7% (2006 est.)
GDP - per capita (PPP)$16,100 (2008 est.)
$15,200 (2007 est.)
$14,000 (2006 est.)
note: data are in 2008 US dollars
GDP - composition by sector(%)agriculture: 4.7%
industry: 37.6%
services: 57.7% (2008 est.)
Labor force75.7 million (2008 est.)

Labor force - by occupation(%)agriculture: 10.2%
industry: 27.4%
services: 62.4% (2007 est.)
Unemployment rate(%)6.4% (2008 est.)
6.2% (2007 est.)
Population below poverty line(%)15.8% (November 2007)
Household income or consumption by percentage share(%)lowest 10%: 1.9%
highest 10%: 30.4% (September 2007)
Distribution of family income - Gini index41.5 (September 2008)
39.9 (2001)
Investment (gross fixed)(% of GDP)22.1% of GDP (2008 est.)
Budgetrevenues: $364.6 billion
expenditures: $304.6 billion (2008 est.)
Inflation rate (consumer prices)(%)14.1% (2008 est.)
9% (2007 est.)

Stock of money$252.5 billion (31 December 2008)
$303.7 billion (31 December 2007)
Stock of quasi money$318.4 billion (31 December 2008)
$292.5 billion (31 December 2007)
Stock of domestic credit$367.2 billion (31 December 2008)
$339.1 billion (31 December 2007)
Market value of publicly traded shares$397.2 billion (31 December 2008 est.)
$1.503 trillion (31 December 2007)
$1.057 trillion (31 December 2006 est.)
Economic aid - recipient$982.7 million in FY06 from US, including $847 million in non-proliferation subsidies

Public debt(% of GDP)6.5% of GDP (2008 est.)
28.2% of GDP (2004 est.)
Agriculture - productsgrain, sugar beets, sunflower seed, vegetables, fruits; beef, milk
Industriescomplete range of mining and extractive industries producing coal, oil, gas, chemicals, and metals; all forms of machine building from rolling mills to high-performance aircraft and space vehicles; defense industries including radar, missile production, and advanced electronic components, shipbuilding; road and rail transportation equipment; communications equipment; agricultural machinery, tractors, and construction equipment; electric power generating and transmitting equipment; medical and scientific instruments; consumer durables, textiles, foodstuffs, handicrafts

Industrial production growth rate(%)3.5% (2008 est.)

Current account balance$102.4 billion (2008 est.)
$77.01 billion (2007 est.)
Exports$471.6 billion (2008 est.)
$354.4 billion (2007 est.)

Exports - commodities(%)petroleum and petroleum products, natural gas, wood and wood products, metals, chemicals, and a wide variety of civilian and military manufactures
Exports - partners(%)Netherlands 11.2%, Italy 8.1%, Germany 8%, Turkey 6%, Ukraine 5.1%, Poland 4.5%, China 4.3% (2008)
Imports$291.9 billion (2008 est.)
$223.5 billion (2007 est.)

Imports - commodities(%)vehicles, machinery and equipment, plastics, medicines, iron and steel, consumer goods, meat, fruits and nuts, semifinished metal products
Imports - partners(%)Germany 13.5%, China 13.2%, Japan 6.5%, Ukraine 6%, US 4.5%, Italy 4.3% (2008)

Reserves of foreign exchange and gold$427.1 billion (31 December 2008 est.)
$476.4 billion (31 December 2007 est.)
Debt - external$483.5 billion (31 December 2008)
$471 billion (31 December 2007)

Stock of direct foreign investment - at home$491.2 billion (2007)
$271.6 billion (2006)
Stock of direct foreign investment - abroad$176.7 billion (31 December 2008 est.)
$209.6 billion (2006)
Exchange ratesRussian rubles (RUB) per US dollar - 24.3 (2008 est.), 25.659 (2007), 27.19 (2006), 28.284 (2005), 28.814 (2004)

Currency (code)Russian ruble (RUB)

Telephones - main lines in use44.2 million (2008)
Telephones - mobile cellular187.5 million (2008)
Telephone systemgeneral assessment: the telephone system is experiencing significant changes; there are more than 1,000 companies licensed to offer communication services; access to digital lines has improved, particularly in urban centers; Internet and e-mail services are improving; Russia has made progress toward building the telecommunications infrastructure necessary for a market economy; the estimated number of mobile subscribers jumped from fewer than 1 million in 1998 to nearly 188 million in 2008; a large demand for main line service remains unsatisfied
domestic: cross-country digital trunk lines run from Saint Petersburg to Khabarovsk, and from Moscow to Novorossiysk; the telephone systems in 60 regional capitals have modern digital infrastructures; cellular services, both analog and digital, are available in many areas; in rural areas, the telephone services are still outdated, inadequate, and low density
international: country code - 7; Russia is connected internationally by undersea fiber optic cables; digital switches in several cities provide more than 50,000 lines for international calls; satellite earth stations provide access to Intelsat, Intersputnik, Eutelsat, Inmarsat, and Orbita systems (2008)
Internet country code.ru; note - Russia also has responsibility for a legacy domain ".su" that was allocated to the Soviet Union and is being phased out
Internet users45.25 million (2008)
Airports1,216 (2009)
Pipelines(km)condensate 122 km; gas 158,767 km; liquid petroleum gas 127 km; oil 74,285 km; refined products 13,658 km; water 23 km (2008)
Roadways(km)total: 933,000 km
paved: 754,984 km (includes 30,000 km of expressways)
unpaved: 178,016 km
note: includes public, local, and departmental roads (2006)

Ports and terminalsAzov, Kaliningrad, Kavkaz, Nakhodka, Novorossiysk, Primorsk, Saint Petersburg, Vostochnyy
Military branchesGround Forces (Sukhoputnyye Voyskia, SV), Navy (Voyenno-Morskoy Flot, VMF), Air Forces (Voyenno-Vozdushniye Sily, VVS); Airborne Troops (VDV), Strategic Rocket Forces (Raketnyye Voyska Strategicheskogo Naznacheniya, RVSN), and Space Troops (Kosmicheskiye Voyska, KV) are independent "combat arms," not subordinate to any of the three branches; Russian Ground Forces include the following combat arms: motorized-rifle troops, tank troops, missile and artillery troops, air defense of ground troops (2009)
Military service age and obligation(years of age)18-27 years of age for compulsory or voluntary military service; males are registered for the draft at 17 years of age; service obligation - 1 year; reserve obligation to age 50; as of July 2008, a draft military strategy called for the draft to continue up to the year 2030 (2009)
Manpower available for military servicemales age 16-49: 36,219,908
females age 16-49: 37,019,853 (2008 est.)
Manpower fit for military servicemales age 16-49: 21,098,306
females age 16-49: 27,968,883 (2009 est.)
Manpower reaching militarily significant age annuallymale: 741,692
female: 706,081 (2009 est.)
Military expenditures(% of GDP)3.9% of GDP (2005)
Disputes - internationalChina and Russia have demarcated the once disputed islands at the Amur and Ussuri confluence and in the Argun River in accordance with the 2004 Agreement, ending their centuries-long border disputes; the sovereignty dispute over the islands of Etorofu, Kunashiri, Shikotan, and the Habomai group, known in Japan as the "Northern Territories" and in Russia as the "Southern Kurils," occupied by the Soviet Union in 1945, now administered by Russia, and claimed by Japan, remains the primary sticking point to signing a peace treaty formally ending World War II hostilities; Russia and Georgia agree on delimiting all but small, strategic segments of the land boundary and the maritime boundary; OSCE observers monitor volatile areas such as the Pankisi Gorge in the Akhmeti region and the Kodori Gorge in Abkhazia; Azerbaijan, Kazakhstan, and Russia signed equidistance boundaries in the Caspian seabed but the littoral states have no consensus on dividing the water column; Russia and Norway dispute their maritime limits in the Barents Sea and Russia's fishing rights beyond Svalbard's territorial limits within the Svalbard Treaty zone; various groups in Finland advocate restoration of Karelia (Kareliya) and other areas ceded to the Soviet Union following the Second World War but the Finnish Government asserts no territorial demands; in May 2005, Russia recalled its signatures to the 1996 border agreements with Estonia (1996) and Latvia (1997), when the two Baltic states announced issuance of unilateral declarations referencing Soviet occupation and ensuing territorial losses; Russia demands better treatment of ethnic Russians in Estonia and Latvia; Estonian citizen groups continue to press for realignment of the boundary based on the 1920 Tartu Peace Treaty that would bring the now divided ethnic Setu people and parts of the Narva region within Estonia; Lithuania and Russia committed to demarcating their boundary in 2006 in accordance with the land and maritime treaty ratified by Russia in May 2003 and by Lithuania in 1999; Lithuania operates a simplified transit regime for Russian nationals traveling from the Kaliningrad coastal exclave into Russia, while still conforming, as an EU member state with an EU external border, where strict Schengen border rules apply; preparations for the demarcation delimitation of land boundary with Ukraine have commenced; the dispute over the boundary between Russia and Ukraine through the Kerch Strait and Sea of Azov remains unresolved despite a December 2003 framework agreement and on-going expert-level discussions; Kazakhstan and Russia boundary delimitation was ratified on November 2005 and field demarcation should commence in 2007; Russian Duma has not yet ratified 1990 Bering Sea Maritime Boundary Agreement with the US

Refugees and internally displaced personsIDPs: 18,000-160,000 (displacement from Chechnya and North Ossetia) (2007)
Trafficking in personscurrent situation: Russia is a source, transit, and destination country for men, women, and children trafficked for various purposes; it remains a significant source of women trafficked to over 50 countries for commercial sexual exploitation; Russia is also a transit and destination country for men and women trafficked from Central Asia, Eastern Europe, and North Korea to Central and Western Europe and the Middle East for purposes of forced labor and sexual exploitation; internal trafficking remains a problem in Russia with women trafficked from rural areas to urban centers for commercial sexual exploitation, and men trafficked internally and from Central Asia for forced labor in the construction and agricultural industries; debt bondage is common among trafficking victims, and child sex tourism remains a concern
tier rating: Tier 2 Watch List - Russia is on the Tier 2 Watch List for a fifth consecutive year for its failure to show evidence of increasing efforts to combat trafficking over the previous year, particularly in providing assistance to victims of trafficking; comprehensive trafficking victim assistance legislation, which would address key deficiencies, has been pending before the Duma since 2003 and was neither passed nor enacted in 2007 (2008)
Electricity - production(kWh)958 billion kWh (2007 est.)
Electricity - production by source(%)fossil fuel: 66.3%
hydro: 17.2%
nuclear: 16.4%
other: 0.1% (2003)
Electricity - consumption(kWh)840.4 billion kWh (2007 est.)
Electricity - exports(kWh)18.6 billion kWh (2008 est.)
Electricity - imports(kWh)3.105 billion kWh (2008 est.)
Oil - production(bbl/day)9.79 million bbl/day (2008 est.)
Oil - consumption(bbl/day)2.9 million bbl/day (2008 est.)
Oil - exports(bbl/day)6.845 million bbl/day (2007 est.)
Oil - imports(bbl/day)47,360 bbl/day (2007 est.)
Oil - proved reserves(bbl)60 billion bbl (1 January 2009 est.)
Natural gas - production(cu m)662.2 billion cu m (2008 est.)
Natural gas - consumption(cu m)475.7 billion cu m (2008 est.)
Natural gas - exports(cu m)243.4 billion cu m (2008)
Natural gas - proved reserves(cu m)47.57 trillion cu m (1 January 2009 est.)
HIV/AIDS - adult prevalence rate(%)1.1% (2007 est.)
HIV/AIDS - people living with HIV/AIDS940,000 (2007 est.)
HIV/AIDS - deaths40,000 (2007 est.)
Major infectious diseasesdegree of risk: intermediate
food or waterborne diseases: bacterial diarrhea
vectorborne disease: tickborne encephalitis
note: highly pathogenic H5N1 avian influenza has been identified in this country; it poses a negligible risk with extremely rare cases possible among US citizens who have close contact with birds (2009)
Literacy(%)definition: age 15 and over can read and write
total population: 99.4%
male: 99.7%
female: 99.2% (2002 census)

School life expectancy (primary to tertiary education)(years)total: 14 years
male: 13 years
female: 14 years (2006)
Education expenditures(% of GDP)3.8% of GDP (2005)








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