The Economic Challenges of Current Russia November 2012

President Putin's third mandate might be threatened by an increasing discontent. The opposition sentiment remains strong despite the Kremlin's efforts to muzzle dissent. Hopes for a quick change that many protesters had during the winter have waned, but opposition supporters appear ready to dig for a long fight.
Yet Russia's leadership is choosing short-term social and political stability at the expense of long-term growth and investment. All the analyses of this study stress the need for modernization and economic diversification as a way for Russia to develop into a normal state. As Popov highlights, despite impressive progress, corruption, oligarchic capitalism, deindustrialization of the economy and decline in R&D, income inequalities, deterioration of health and education, increase in mortality, clericalization of the society and cultural degradation are still impediments to the full success of the country. Busygina puts emphasis on interregional disparities and the gap in development between the centre and the periphery of the country.
On the external front, Wisniewska doubts that the establishment of the Customs Union and the Common Economic Space can seriously boosts the economic attractiveness of the region even in the case of Ukraine's accession.
Verda as well insists on the need for a multi-level diversification.
Confronted with the unpredictable trend of the oil price, the Kremlin will need to carefully balance the urgency of the reforms and the preservation of the internal order and political stability. It will be a tough challenge, but it will determine Russia's place in the world for the next decades.

Serena Giusti, ISPI Research Fellow, presents the study.



Is Russian Economy Likely to Become a New "Asian Tiger"?

Vladimir Popov

The economic reforming process needed for the passage from Soviet Union to Russia Federation was a hard one with high social costs. By 2012 the economy finally surpassed the pre recession level of 1989 and the budget deficit turned into surplus. Economic growth and political stability along with better conditions of life have been the most relevant... read all

Development of Russia's Regions: Current Trends and Implications of Modernisation

Irina Busygina

The spatial dimension of Russia is crucial in evaluating the consequences of all domestic reforms and external shocks, taking into consideration the territorial size of the country and the degree of interregional disparities. Thus, the recent global economic crisis has shown a significant degree of interregional disparities. Thus, the recent global economic... read all

The Customs Union of Belarus, Kazakhstan and Russia: a Way to Strengthen Moscow's Position in the Region

Iwona Wisniewska

In mid-2009, Russian Prime Minister Putin gave new impetus to launch the Customs Union and the Common Economic Space between Belarus, Kazakhstan and Russia, and has consistently supervised its implementation ever since. The Common Import Tariff and the Common Customs Code were introduced in 2010. Formally, the Common Economic Space began... read all

Russian Oil and Gas Sector: Political and Economic Prospects

Matteo Verda

Energy sector has a pivotal role for the economy and the political system of the Russian Federation. Oil and gas industry provides a quarter of the GDP, two thirds of the exports and half of the budget income. As a result, Russian economy and Government expenditures rely on high oil price. A sudden drop would bring to a deep economic crisis, with unpredictable... read all

ISSN 2281-3152


Serena Giusti and Tomislava Penkova (Heads of Research), Irina Busygina, Vladimir Popov, Matteo Verda, Iwona Wisniewska