Russian political system The Russian political system is one of the more recent to embrace democracy but remains

deeply flawed in terms of its democratic credentials, overwhemingly tainted by corruption, and massively influenced by the power and personality of one man, Vladimir Putin. The Russian Federation was the largest nation to emerge from the break up of the Soviet nion in !ecember "##". Following the constitutional crisis of "##$, Russia adopted a new constitution in a referendum of !ecember "##$. %ssentially the country is described as a federal presidential republic. &ountry &omparisons

The Russian economy is stagnating, with gross domestic product growth in the past nine months of ".'( compared with the year earlier, Russian news agencies reported the economy minister as saying. The Russian Federation has a centrali)ed political system, with power concentrated in a president and a prime minister, a weak multiparty political system dominated by

the ruling nited Russia party, and a bicameral legislature *Federal +ssembly,. The Federal +ssembly consists of a lower house *State !uma, and an upper house *Federation &ouncil,. The country has an estimated population of "-. million. Security forces generally reported to civilian authorities/ however, in some areas of the 0orthern &aucasus, there were serious problems with civilian control of security forces. There were numerous reports of governmental and societal human rights problems and abuses during the year The 1nternational 2onetary Fund warned that Russia3s economic model has e4hausted itself and predicted that future growth will be constrained by negative demographic trends. The 12F3s annual 5orld %conomic 6utlook said that the Russian economy has managed to grow on the back of rising oil prices and by using up spare capacity, but that this formula will no longer work. 7rowth prospects in Russia, the 12F said, 8have been dampened by a weak e4ternal environment, some acceleration of capital outflows and declining e9uity prices and subdued investment.: The 12F also warned that demographic changes are likely to cap future economic potential. Russia;s dependent population is growing, and the working<age population is e4pected to shrink by one million people every year through .=">, according to the 5orld ?ank. Problems that Russia could afford to ignore will now come to the fore, the 12F suggested. These include @inade9uate

physical infrastructure, including the transportation and electricity networks/ overreliance on commodities/ and a weak business climate,: the Fund said. The government predicts that the Russian economy will grow ".A percent this year, the lowest rate since the .==# financial crisis. 7rowth in Russia in .=". fell to $.- percent from -.$ percent a year earlier. The 12F is more pessimistic in its growth forecasts than 2oscow. 1t predicts in its report that growth in Russia will be ".' percent in .="$, down from the ..' percent forecast in Buly. Cremlin critics say the government is unprepared to undertake the structural reforms that could increase investment and unlock higher economic growth rates. &ountry;s Score 6ver Time

Russia3s economic environment remains 8mostly unfree.: !espite relatively high economic growth, achieved mostly through sales of oil and gas, the foundations for long<term economic development remain fragile without an efficiently functioning legal framework. &orruption, endemic throughout the economy, is becoming ever more debilitating. The state maintains an e4tensive presence in

many sectors through state<owned enterprises. Darge state< owned institutions have increased their domination of the financial sector, outweighing domestic private and foreign banks. +fter serving as president from "###E.==A and prime minister from .==A to .="., Vladimir Putin was again elected president in 2ay .=". on the heels of hotly contested !ecember .="" !uma elections. 6pposition protests continued in .=".. The state has reasserted its dominant role in the mining and oil and gas industries and depends heavily on e4ports of natural resources, especially hydrocarbons. Russia3s reputation for cronyism, corruption, and a hyper<regulatory environment has damaged its investment profile. The economy began to grow again in .="", but at modest levels. 1n +pril .="., &hina surpassed 7ermany as Russia3s largest trading partner. Russia became a member of the 5orld Trade 6rgani)ation in !ecember .=".. Russia3s legal framework has not been fully moderni)ed. The rule of law is not maintained uniformly across the country, and the Fudiciary is vulnerable to political pressure and inconsistent in applying the law. Protection of private property rights is weak, and contracts are not always secure. 1nfringements of intellectual property rights continue. &orruption remains a maFor problem for businesses and investors.

The income ta4 rate is a flat "$ percent, and the top corporate ta4 rate is .= percent. 6ther ta4es include a value<added ta4 *V+T, and an environmental ta4. The overall ta4 burden e9uals .>.. percent of total domestic income. 7overnment spending has decreased to a level e9uivalent to $# percent of 7!P, turning the budget balance to surplus thanks in part to oil revenues. Public debt has been reduced to under "= percent of total domestic output. The business environment has improved only marginally, and regulations remain burdensome. ?ureaucratic obstacles and inconsistent enforcement of regulations make entrepreneurial decision<making very uncertain. The outmoded labor code continues to limit employment and productivity growth. The state influences prices through e4tensive subsidies and numerous state<owned enterprises. Russia has undergone significant changes since the collapse of the Soviet nion, moving from a globally<isolated, centrally<planned economy to a more market<based and globally<integrated economy. %conomic reforms in the "##=s privati)ed most industry, with notable e4ceptions in the energy and defense<related sectors. The protection of property rights is still weak and the private sector remains subFect to heavy state interference. Russian industry is primarily split between globally<competitive commodity producers. 1n .="", Russia became the world;s leading oil producer, surpassing Saudi +rabia/ Russia is the second< largest producer of natural gas/ Russia holds the world;s largest natural gas reserves, the second<largest coal

reserves, and the eighth<largest crude oil reserves. Russia is also a top e4porter of metals such as steel and primary aluminum. Russia;s reliance on commodity e4ports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices. The government since .==> has embarked on an ambitious program to reduce this dependency and build up the country;s high technology sectors, but with few results so far. The economy had averaged >( growth in the decade following the "##A Russian financial crisis, resulting in a doubling of real disposable incomes and the emergence of a middle class. The Russian economy, however, was one of the hardest hit by the .==A<=# global economic crisis as oil prices plummeted and the foreign credits that Russian banks and firms relied on dried up. +ccording to the 5orld ?ank the government;s anti<crisis package in .==A<=# amounted to roughly G.>( of 7!P. The economic decline bottomed out in mid<.==# and the economy began to grow in the third 9uarter of .==#. High oil prices buoyed Russian growth in .=""<". and helped Russia reduce the budget deficit inherited from .==A<=#. Russia has reduced unemployment to a record low and has lowered inflation below double digit rates. Russia Foined the 5orld Trade 6rgani)ation in .="., which will reduce trade barriers and help open foreign markets for Russian goods. +t the same time, Russia has sought to cement economic ties with countries in the former Soviet space through a &ustoms nion with ?elarus and Ca)akhstan, and, in the ne4t several years, through a new Russia<led economic bloc called the %urasian nion. Russia has had difficulty attracting captial and has suffered large capital outflows in the past several

years, leading to official programs to improve Russia;s international rankings for its investment climate. Russia;s long<term challenges also include a shrinking workforce, intractable large< and small<scale corruption, and underinvestment in infrastructure.