Library of Congress – Federal Research Division Country Profile: Russia, October 2006 

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COUNTRY PROFILE: RUSSIA 

October 2006

COUNTRY 

Formal Name: Russian Federation (Rossiyskaya Federatsiya). 

Short Form: Russia. 

Term for Citizen(s): Russian(s). 

Capital: Moscow (Moskva). 

Major Cities (in order of population): St. Petersburg, Novosibirsk, Yekaterinburg, Nizhniy 

Novgorod, Omsk, Samara, Kazan’, Chelyabinsk, Rostov-na-Donu, Ufa, Volgograd, and Perm. 

Independence: Russia officially marks its independence on June 12, 1991, the date of the 

Russian Republic’s declaration of sovereignty from the Soviet Union. 

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Public Holidays: Official holidays are New Year’s (January 1–2), Orthodox Christmas (January 

7), Women’s Day (March 8), Orthodox Easter Monday (variable date in April or early May), 

May Day (May 1–2), Victory Day (May 9), Russia Day (Independence Day, June 12), National 

Unity Day (November 4), and Constitution Day (December 12). 

Flag: Three equal-sized horizontal bands of white (top), red, and blue. 

HISTORICAL BACKGROUND 

Early History: Kievan Rus’, which was founded in the late ninth century, was the first state 

established on the territory of modern Russia. In 988 Orthodox Christianity was declared the 

official religion of this state, which thereafter maintained close relations with the Byzantine 

Empire. In the thirteenth century, a weakened and fragmented Kiev was overrun by a Mongol 

invasion. The Mongol occupation, which lasted until 1480, provided the conditions for a new 

state, Muscovy, to emerge and eclipse Kiev. Under a series of strong rulers, by 1600 Muscovy 

had consolidated a large portion of what later was European Russia. The concurrent decline of 

the Byzantine Empire led to a longstanding claim that Moscow was the “Third Rome,” and an 

independent Russian Orthodox Church emerged in 1589. 

The Romanovs: In 1613 Muscovy ended a period of political and economic hardship by naming 

as tsar Mikhail Romanov (r. 1613–45), whose family would rule Muscovy and then Russia for 

the next 300 years. After a series of weak rulers, Peter I (the Great, r. 1682–1725) emerged at the 

end of the seventeenth century as a powerful force for change. In a series of wars, political 

reforms, and extensive contacts with the West, Peter laid the foundation of the Russian Empire 
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as a world power open to foreign cultural influences. The eighteenth century ended with another 

powerful monarch, Catherine II (the Great, r. 1762–96), who further expanded the empire and 

attempted political and social reform. By the first half of the nineteenth century, Russia was one 

of the most influential countries in Europe. However, Russia did not share the advances of the 

Industrial Revolution, and the survival of serfdom as the basis of Russian agriculture further 

hindered social and economic progress in this period. 

Revolution and Formation of the Soviet Union: Throughout the nineteenth century, Russia 

was governed by autocratic rulers who suppressed revolutionary ideals imported from the West. 

Major social and economic reform programs in the 1860s and at the turn of the century failed to 

address Russia’s most acute problems. In 1914, when Russia became a major participant in 

World War I, the economic gap between Russia and Western Europe had grown and so had 

dissatisfaction with the monarchy. Combined with those conditions, the stress of the war effort 

allowed the radical Bolshevik Party, led by Vladimir I. Lenin, to overthrow the provisional 

government that had displaced the tsar in 1917. At the conclusion of a bloody, four-year civil 

war, Russia began a 70-year period of one-party rule as the major constituent part of a new 

entity, the Soviet Union. At the outset, that union included Ukraine, Byelorussia, and three 

Transcaucasian republics; the ruling party was known as the Communist Party of the Soviet 

Union (CPSU). 

After an initial period of confusion and experimentation, in 1927 the Soviet Union came under 

the control of Joseph V. Stalin. Stalin’s regime became steadily more repressive in the 1930s and 

locked the national economy into a rigid system of state control, with five-year plans prescribing 

the performance of every economic sector and heavily emphasizing heavy industry. By 1939 the 

Soviet Union had been transformed from a primarily agricultural country into a world industrial 

power. From 1941 until 1944, the Soviet Union fought German invading forces in World War II, 

losing millions of Russian lives. After the war, the Soviet Union and the United States emerged 

as the world’s major economic and ideological rivals in what soon came to be called the Cold 

War. In the early years of that confrontation, the Soviet Union gained control of all of Eastern 

Europe and developed a nuclear bomb. The death of Stalin in 1953 led to some domestic 

liberalization under Nikita Khrushchev (party leader, 1953–64), but the ideologically based 

confrontation with the West continued until the collapse of the Soviet Union in 1991. 

Under Leonid I. Brezhnev, party leader from 1964 until 1982, major agreements brought some 

relief of Cold War tensions, but an 11-year Soviet occupation of Afghanistan (1979–89) 

minimized their effect. The accession of Mikhail S. Gorbachev as CPSU first secretary in 1985 

brought major changes in domestic and international policy. Gorbachev liberalized economic, 

political, and media policies and fostered closer relations with the West. By 1991, however, the 

inherent weaknesses of the Soviet Union brought about the collapse of its East European empire 

and then the union itself. When the union ended, the former Russian Republic became a separate 

country, the Russian Federation, under the leadership of Boris N. Yeltsin. 

The Russian Federation: In nine years as president of Russia (1991–2000), Yeltsin oversaw a 

chaotic transformation that ended the dominance of communism and brought irregular reforms in 

the economic, political, and social realms. Although the constitution of 1993 made the executive 

the dominant branch of government, Yeltsin struggled with the legislative branch over many 
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issues. Economic reform was undermined by corruption and public suspicion as Russia 

nominally moved toward a free-market system. Judicial reform was piecemeal and ineffective. 

Relations with the West, which began the 1990s in close concert, soured somewhat over issues 

such as expansion of the North Atlantic Treaty Organization, Russia’s ongoing conflicts with the 

Republic of Chechnya, and Russia’s opposition to the United States-led war in Iraq in 2003. A 

new concentration of executive power began with the presidency of Vladimir V. Putin (elected in 

2000), Yeltsin’s handpicked successor who sought to restore Russia’s regional power while 

maintaining relations with the West. Putin was reelected overwhelmingly in 2004. In the first six 

years of his presidency, political opposition became extremely fragmented, media independence 

lessened significantly, and Putin was able to shift the center of economic power from a group of 

independent entrepreneurs to government-controlled enterprises and cronies. Although 

repression of the media and nongovernmental organizations increasingly strained relations with 

the West, in 2006 Putin retained guarded support from Western governments and gained prestige 

by hosting a meeting of the G–8 nations. 

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GEOGRAPHY

Location: Russia occupies much of easternmost Europe and 

northern Asia, stretching from Norway to the Pacific Ocean 

and from the Black Sea to the Arctic Ocean. 

Size: With an area of 17,075,200 square kilometers (16,995,800 of which are land surface), 

Russia is the largest country in the world. 

Land Boundaries: Russia’s land boundaries extend 21,139 kilometers, bordering the following 

nations: Azerbaijan (284 kilometers), Belarus (959 kilometers), China (3,645 kilometers), 

Estonia (290 kilometers), Finland (1,313 kilometers), Georgia (723 kilometers), Kazakhstan 

(6,846 kilometers), the Democratic People’s Republic of Korea (North Korea) (19 kilometers), 

Latvia (217 kilometers), Lithuania (227 kilometers), Mongolia (3,441 kilometers), Norway (167 

kilometers), Poland (432 kilometers), and Ukraine (1,576 kilometers). 

Disputed Territory: Russia has unresolved territorial disputes with Japan over the southernmost 

four Kuril Islands; with Ukraine over the maritime boundary in the Kerch Strait north of the 

Black Sea; and with other Caspian littoral states over control of offshore resources. In 2004 

seabed treaties with Azerbaijan and Kazakhstan eliminated one issue in the Caspian region. 

Some border segments with Georgia, Estonia, and Latvia have not been accepted by both parties. 

In 2005 China and Russia ended a long dispute by agreeing to divide jurisdiction over river 

islands along their common border. 

Length of Coastline: 37,653 kilometers, bordering the Arctic, Atlantic, and Pacific oceans. 

Maritime Claims: Russia claims a 200-nautical-mile exclusive economic zone, a 12-nauticalmile territorial sea, and jurisdiction over the continental shelf to a 200-meter depth or to the 

depth of resource exploitation. 
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Topography: European Russia is dominated by a broad plain, with low hills west of the Ural 

Mountains. The Urals, considered the boundary between European and Asian Russia, stretch 

from the Arctic island of Novaya Zemlya to the border of Kazakhstan. East of the Urals is the 

vast West Siberian Plain, then the Central Siberian Plateau. East of the Central Siberian Plateau 

is the Lena Plateau. Russia’s southern border with Mongolia and its entire Pacific coast are 

marked by mountain ranges. The border with China is defined by the Amur River valley. Siberia 

contains vast coniferous forests, to the north of which is a broad tundra zone extending to the 

Arctic Ocean. The southwestern border is marked by the uplands of the northern slope of the 

Caucasus Mountains. In Russia’s southernmost extremity, flat, fertile steppe extends between its 

borders with Ukraine on the west and Kazakhstan on the east. About 10 percent of the country is 

swampland; about 45 percent is forested. 

Principal Rivers: Russia’s principal rivers are the Amur, Irtysh, Lena, Ob’, and Volga. The 

Irtysh, Lena, and Ob’ flow northward across Asian Russia into the Arctic Ocean. The Volga is 

the longest river in Europe. All of these rivers have complex systems of tributaries that 

collectively drain much of Russia’s territory. 

Climate: The climate of Russia’s vast territory ranges from temperate to Arctic continental. 

European Russia receives some maritime climatic influence from the Baltic and Black seas and 

the Atlantic Ocean; from the Urals to the Far East, the climate is fully continental. The Pacific 

Ocean provides the southern Far East with warm, humid monsoon conditions. Winter weather 

varies from short-term and cold along the Black Sea to long-term and frigid in northern Siberia. 

Summer conditions range from warm on the steppes to cool along the Arctic coast. Much of 

Russia is covered by snow for six months of the year, and the weather often is harsh and 

unpredictable. In European Russia, the average annual temperature is 0° C; Moscow’s average is 

4° C. In Moscow the average midsummer high temperature is 23o, and the average midwinter 

high temperature is –9o C. The yearly average in southern Siberia is 0° C and in north-central 

Siberia –9° C. The Pacific port of Vladivostok averages 5° C. The precipitation in most areas is 

low to moderate. Mountains in the northwest receive as much as 2,000 millimeters annually, and 

points on the Pacific Coast receive as much as 1,000 millimeters. 

Natural Resources: Russia possesses a vast variety of natural resources, many of which are 

located far from industrial processing centers. The fuel resources that supported development of 

industrial centers in European Russia have been depleted, necessitating reliance on coal, natural 

gas, and petroleum from Siberian deposits. However, Russia still has an estimated 6 percent of 

the world’s oil deposits and one-third of the world’s natural gas deposits, making it a major 

exporter of both commodities. In 2005 oil extraction reached a new post-Soviet high, placing 

Russia close to Saudi Arabia as the world’s largest producer. Rich deposits of most industrially 

valuable metals, diamonds, and phosphates also are found in Russia. 

Russia’s northerly location limits available agricultural land, which is concentrated in the area 

between the Black and Caspian seas, along the borders of Ukraine and Kazakhstan, and in 

southern and western Siberia. Poor soil and short seasons restrict agricultural production in the 

European north to livestock. Erosion has depleted soil quality in many farming areas. Siberia 

contains nearly 50 percent of the world’s coniferous forests, but Russia’s forest management has 

declined sharply in recent years, and commercial clear-cutting is reducing the forest stock at a 
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rapid rate. Coastal and river waters have supported an extensive fishing industry, which also is 

threatened by pollution and poor regulation. 

Land Use: In 2005 some 7.2 percent of Russia’s land was classified as arable, 45 percent was 

forested, and 0.1 percent was planted to permanent crops. In 2003 about 46,000 square 

kilometers were irrigated. 

Environmental Factors: Largely because Soviet-era industrial, energy, and agricultural policies 

ignored environmental protection, many sectors of Russia are considered environmentally 

hazardous. Most major industrial centers have poor air and water quality, and air quality in all 

urban centers is substandard. The Caspian and Black seas, the Sea of Azov, the Volga River, and 

Lake Baikal are areas of severe water pollution. Industrial nodes in the Kola Peninsula, central 

Siberia, and the Urals emit especially large amounts of air pollutants. Persistent, large-scale 

pipeline leaks have saturated the soil in large areas of Western Siberia and Chechnya with oil. 

Rapidly increasing numbers of vehicles, using unleaded gas, exacerbate air pollution. 

Agricultural soil quality is reduced by erosion and overgrazing, and unrestricted harvesting 

reduces natural forests. Unsafe disposal of radioactive materials pollutes coastal water, rivers, 

and terrestrial areas. Russia’s 12 operational RBMK-type nuclear reactors are considered unsafe; 

some reactors (with design modifications) are not scheduled for shutdown until after 2010. 

Official environmental protection has declined since the early 1990s, when the public briefly 

supported meaningful reversal of Soviet environmental practices. In 2000 the Putin government 

abolished Russia’s Environmental Protection Committee (which earlier had lost its ministry 

status) and the Federal Forest Service. After substantial delay, in 2004 Russia ratified the Kyoto 

Protocol on greenhouse gases, making possible the enforcement of the protocol in signatory 

nations. 

Time Zones: Russia’s territory includes 11 time zones. Moscow is three hours ahead of 

Greenwich Mean Time. 

SOCIETY

Population: In August 2006, Russia’s population was an estimated 142.4 million, a decrease of 

4.1 million since 1989. That total made Russia the seventh most populous country in the world. 

However, a long-term population decline of 600,000 per year is forecast, reducing the population 

to as little as 112 million by 2050. Of the 2006 total, 73 percent live in cities and towns and 27 

percent in rural areas, a ratio that has remained stable since 1989. Some 89 million people (61 

percent of the population) were of working age in 2002, but the working-age population was 

expected to decrease by as much as 15 percent during the ensuing 20 years. In 2004 the number 

of abortions (1.6 million) exceeded the number of live births (1.5 million), continuing a trend of 

the early 2000s. 

About 1 million residents of Russia are citizens of other countries. In 2006 the estimated rate of 

net migration was 1.03 persons per 1,000 population, compared with a rate of 0.9 in 2004. 

Between 2002 and 2004, the rate had decreased by 55 percent. In 2005 net migration was 

107,000, an increase of 7.5 percent over 2004. 
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Demography: In 2004 the average age was 37.7 years, an increase of three years since 1989, 

indicating a steadily aging population. In 2006 only 14 percent of the population was younger 

than 15 years of age, and 14 percent was older than 64. Life expectancy was 60.5 years for men, 

74.1 for women—one of the largest life expectancy differentials by sex in the world. Some 53.7 

percent of the population was female. The birthrate was 9.9 per 1,000 population; the death rate 

was 14.7 per 1,000 population. Infant mortality was 15.1 per 1,000 live births, and the average 

number of children born per woman of childbearing age was 1.3. 

Ethnic Groups and Languages: According to the 2002 census, the largest ethnic groups were 

Russians (representing 80 percent of the total), Tatars, Ukrainians, Bashkirs, Chuvash, Chechens, 

and Armenians, each of which accounted for at least 1 million residents. The official language is 

Russian; approximately 100 other languages are spoken. Ethnic intolerance has increased 

steadily in the Russian population; in the early 2000s, more than 50 percent of respondents in 

polls consistently advocated strong restrictions or expulsion of ethnic minorities. 

Religion: The official state religion is Russian Orthodoxy, which enjoys a privileged position 

with the government. About 75 million Russians belong to that faith, but fewer than half of that 

number are considered active worshippers. The fastest growing religion is Islam, professed by 

about 20 million, a much higher percentage of whom are considered active participants. Other 

religions are Roman Catholicism, 1.3 million; Judaism, between 400,000 and 550,000; and 

Jehovah’s Witnesses, 131,000. Religious activity increased markedly following the collapse of 

communist rule in 1991, but restrictions have remained for certain groups. A 1997 law set 

requirements that religions be registered, putting unrecognized groups at a disadvantage. For 

example, all Muslim groups falling outside the government-sanctioned Spiritual Directorate of 

Muslims of Russia are repressed as potential terrorist organizations. 

Education and Literacy: Russia traditionally has had a highly educated population. According 

to the 2002 census, 99.5 percent of the population above age 10 was literate. The constitution 

guarantees the right to free preschool, basic general, and secondary vocational education. Nine 

years of basic general education are compulsory, from age six until age 15. The first three years 

are considered primary, the remaining years secondary. After exclusive state operation of the 

education system in the Soviet era, many private education institutions appeared in the 1990s. In 

the early 2000s, incomplete curriculum reform has impeded training in new technical fields. 

Beginning in the 1990s, the teaching profession has suffered from low pay and loss of qualified 

individuals, and textbooks, computers, and laboratories have been in short supply. In the early 

2000s, many private institutions of higher learning opened. By 2004 more than 1,000 public and 

private institutions were in operation, and 6.9 million students were enrolled in higher education 

programs in 2005. Unlike the Soviet period, about half of higher education students pay fees 

and/or entrance bribes. The education budget fell drastically in the 1990s, although the Putin 

administration has restored it somewhat since 2002. In 2004 some 4.9 percent of the national 

budget was allocated to education. 

Health: Health care is free in principle, but in practice adequate treatment increasingly depends 

on wealth, and private health care is increasingly sought. Doctors generally are poorly trained 

and inadequately paid; most hospitals are in poor condition—many lack running water and 

sewerage—and waiting lists are long. There is a persistent shortage of nurses, specialized 
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personnel, and medical supplies and equipment. Distribution of facilities and medical personnel 

is highly skewed in favor of urban areas, especially politically influential cities. Russia’s high 

ratio of hospital beds to population—12.1 to 1,000 in 1998—is because outpatient care is not 

emphasized as much as in the West. In 2004 there were 4.9 doctors per 1,000 inhabitants. 

The poor quality of air and water in many areas and the prevalence of heavy smoking and 

alcohol use (especially among men) exacerbate the overall poor health of the nation. Preventive 

health care is a low priority. The medical conditions most frequently causing death are 

cardiovascular disease (the cause of more than half of deaths), cancer, respiratory diseases, and 

diabetes. In the early 2000s, declining health care and housing standards led to increases in 

communicable diseases such as tuberculosis, diphtheria, and cholera. Among children, poor 

nutrition has increased the incidence of anemia, stomach ulcers, endocrine disorders, and iodine 

deficiency. The mortality rate for traffic accidents is nearly twice the rate in Western Europe, and 

in 2005 some 36,000 people died from alcohol abuse. 

In 2006 Russia’s Federal AIDS (acquired immune deficiency syndrome) Center reported 1.5 

million confirmed cases of human immunodeficiency virus (HIV), 341,000 of which were 

officially registered. In 2005 Russia had the most rapid rate of increase in HIV cases outside subSaharan Africa. By that time, sexual activity had overtaken narcotics use as the main avenue of 

HIV transmission, and the trafficking of Russian women for the sex industry in Europe made 

Russia’s high HIV rate an international concern. Poor health care in the prisons made them 

another major source of HIV-positive individuals. In 2006 the government allocated an estimated 

US$115 million to HIV and AIDS programs, but local administration and public education 

remained ineffective. 

Responding to Russia’s health crisis, in 2005 President Putin included health care in a list of five 

top national priorities and called for an increase of 85 percent in health-related allocations in the 

2006 federal budget and additional increases in future budgets. Most of the 2006 money was to 

pay for increased wages for health professionals and facilities improvements. 

Welfare: In the 1990s, economic transition and the end of Soviet-era public welfare forced more 

Russians into poverty as state social support programs failed to meet the social needs of a new 

economic system. Most enterprises provide an extensive social safety net for their workers, 

including maternity leave, child allowances, housing, paid vacations, and medical care. Worker 

pensions are funded by employers through a single social tax and by a direct assessment on selfemployed workers and independent farmers. However, many workers are forced to postpone 

retirement because the post-Soviet pension system, which is Russia’s largest expenditure for 

social welfare, has not been adequate to provide for retirees. When the decreasing ratio of active 

workers to pensioners threatened the system’s viability, in 2002 Russia introduced a new system 

in which a portion of the mandatory pension payments of employers is invested in pension funds 

whose proceeds are earmarked for the pensions of workers born after 1967. Participation in 

private pension funds is expected to increase rapidly by 2010. Between 2002 and 2004, average 

monthly benefits increased from US$45 to US$58. 

In 2005 a major welfare reform program began with a very unpopular monetization of privileges 

such as free transportation and medicine. Subsequently, monetization was made optional, and in 
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2006 less than half of recipients accepted cash compensation. In early 2006, about 52 million 

Russians were receiving some form of welfare. In 2006 officially 15 percent of the population 

fell below the minimum subsistence level. However, independent estimates were 25 percent or 

higher, and the incomes of 80 percent of Russians reportedly were falling. The geographical 

distribution of poverty was very uneven; in some regions, the rate was below 10 percent, 

whereas in others it reached 70 percent. 

Government antipoverty measures have been undermined by ongoing high inflation. In 2006 

Minister of Economics German Gref called for a fundamental overhaul of Russia’s state welfare 

system. Most welfare agencies are run at the local or regional rather than the national level, and 

they suffer from inadequate funding and corruption. No agency ministers specifically to the 

homeless, whose number has grown since 1991. The Fund for Social Support, which maintains a 

number of social assistance programs, has suffered from corruption scandals. Private charities do 

not function as freely or as actively as in the West; in 2005 total charitable donations were 

estimated at US$1.5 billion. In an effort to stem Russia’s demographic crisis, in 2006 the 

government doubled child support payments to US$55 per month and offered a one-time 

payment of US$9,200 to women who had a second child. 

ECONOMY

Overview: Since 1991 Russia’s economy has undergone major changes as a result of the 

rejection of the Soviet state planning system and the adoption of various elements of free-market 

commerce. The highly structured Soviet system, nominally following the standards of five-year 

plans, was succeeded by ambitious restructuring aimed at encouraging private enterprise. 

However, in the mid-1990s government privatization plans were undermined by corruption, 

which concentrated significant economic resources in the hands of a well-connected elite rather 

than effecting true redistribution. Large sectors of the state-owned enterprise system, especially 

those in energy, transportation, communications, and heavy industry, remained under 

government control, and by 2005 the state had re-nationalized about one-third of the private oil 

and gas sector. In a poll taken late in 2005, 47 percent of respondents favored a state-run 

economy, and only 16 percent advocated a free-market economy. Plans for extensive 

privatization in 2007 concentrated on firms in non-production spheres, agro-industry, and the 

defense industry. In 2005 an estimated 25 to 40 percent of the gross domestic product (GDP) 

derived from “informal” economic activity, and organized crime continued to play a significant 

role in many types of enterprise. In 2005 the richest 10 percent of the population accounted for 

30 percent of Russia’s income, and the poorest 10 percent accounted for 2 percent of the income. 

This distribution remained constant between 2004 and 2005. The disparity between average 

incomes in Russia’s richest and poorest regions widened in 2005–6. 

In the 1990s, the relative importance of the economic sectors changed significantly. Between 

1991 and 2005, the share of the GDP derived from retail trade and services increased from 36 

percent to nearly 58 percent, as the share of agriculture decreased from 14 percent to 5 percent. 

In the same period, the GDP contribution of industry dropped from nearly 50 percent to 37 

percent. Large enterprises continue to dominate the economy to the detriment of small and 

medium-sized enterprises, which in 2005 contributed only 10 to 15 percent of GDP. The 
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industrial sector is dominated by heavy industry, particularly fuels and energy (20 to 25 percent 

of output) and metallurgy (17 percent of output). High-technology and consumer goods 

production are minor constituents, and light industry contributes only 2 percent of total output. 

Throughout the early 2000s, raw materials exports have contributed a disproportionately high 

percentage to Russia’s economic growth, and the reduction of this dependency has been a high 

priority for economic planners. The ongoing emigration of scientists, 25,000 of whom left 

between 1990 and 2005, threatens the technical base of the economy. 

Gross Domestic Product (GDP): In the first five post-Soviet years (1992–96), Russia’s GDP 

fell by an aggregate 37 percent. The indicator rose in 1997, then fell steeply as Russia suffered a 

major economic crisis. In 1999 the GDP began a six-year trend of expansion that continued in 

2006. The major factors in this rise were rapidly expanding oil and gas sales, government tax 

reforms, and improved investor confidence. In 2004 Russia’s GDP was US$657 billion 

(US$1.41 trillion in terms of purchasing power parity), an increase of 7.1 percent over the 2003 

figure. At that point, GDP had increased by at least 4 percent every year since the economic 

crisis of 1998. In 2005 GDP increased by 6.4 percent to US$741 billion. The official government 

forecast for 2006 was a 6.6 percent increase; long-term forecasts called for increases of 6 percent 

in 2007, 5.8 percent in 2008, and 5.9 percent in 2009, subject to oil and gas price trends. Per 

capita GDP increased in 2005 by 6.8 percent, to US$5,393, or US$11,100 in terms of purchasing 

power parity. In 2005 the services sector contributed 57.5 percent to GDP, the industrial sector 

37.1 percent, and the agricultural sector 5.4 percent. Regional contributions to GDP vary sharply; 

in 2005 the city of Moscow contributed 20 percent and the oil-rich province of Tyumen’ added 

13 percent, while 72 of Russia’s other 87 jurisdictions made a collective contribution of 37 

percent. 

Federal Budget: From 2000 through 2005, Russia’s federal budget showed surpluses each year. 

Tax revenues tripled between 1999 and 2002. Following the tax reform of 2001, which 

established a flat 13 percent income tax rate, income tax revenues increased annually through the 

early 2000s. The 2001 reform also reduced the corporate tax rate from 35 percent to 24 percent, 

and in 2004 the value-added tax was reduced from 20 percent to 18 percent. Although some 32 

percent more income tax money was collected in 2005 than in 2004 and the Federal Taxation 

Service campaigned to eradicate unreported salaries, in 2006 an estimated one-third of wage 

payments still were unrecorded. Tax revenues for 2005 were US$153 billion. In 2005 the budget 

showed a surplus of US$51.1 billion, based on revenues of US$176.7 billion and expenditures of 

US$125.6 billion. The budget for 2006 called for US$197 billion in revenues and US$144 billion 

in expenditures, a surplus of US$53 billion. In the first eight months of the year, the actual 

budget surplus was US$56 billion. In 2006 the government’s Stabilization Fund, established as a 

hedge against future decreases in oil revenue, had about US$27 billion. The preliminary 2007 

budget called for US$260 billion in revenues (based on further rises in oil prices) and US$211 in 

expenditures. By 2005 the failure to use budget surpluses efficiently had become a controversial 

issue in the government. 

Inflation: In the first half of the 1990s, hyperinflation was a major economic problem, as the 

annual rate reached 2,500 percent in 1992. After price stabilization brought the inflation rate 

down to 11 percent in 1997, the financial collapse of 1998 and subsequent currency devaluation 

raised inflation that year to 84.5 percent. Since that time, inflationary pressure has remained a 
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sensitive policy issue, although rates have receded significantly. Stimulated by high costs for fuel 

and manufacturing inputs, the official rate for 2004 was 11.7 percent, exceeding the government 

target of 10 percent. The rate for 2005 was 11 percent. In the first eight months of 2006, prices 

increased by 7.1 percent, somewhat less than the increase in the same period of 2005. The 

official target for 2007 was 7 percent. 

Agriculture: Russia’s agricultural potential, limited by climatic and soil factors to 32 percent of 

the country’s land area, has been further depleted by policies such as overly intensive farming, 

overuse of chemicals, and inappropriate crop choice. In the post-Soviet era, failure to effectively 

convert inefficient collective farms to private ownership has further hampered production. 

Limited sale of agricultural land was approved only in 2002 and, because of the political 

sensitivity of the issue, as of 2006 comprehensive land reform legislation still had not been 

passed. In the 1990s, Russia’s agricultural production fell sharply. After declines of more than 50 

percent in every major crop, output began to increase somewhat in 1999. Between 2003 and 

2005, the average annual increase was 3 percent. However, farm infrastructure has declined 

sharply, and farmers lack funds to purchase key inputs. Federal and subnational jurisdictions still 

subsidize agriculture heavily instead of developing incentives for independent entrepreneurship. 

In 2005 grain remained the largest crop, occupying more than 50 percent of cultivated land. 

Other key crops were sugar beets, sunflower seed, and vegetables. The main livestock outputs 

were cow’s milk, beef and veal, eggs, and pork. 

Forestry: About 45 percent of Russia’s land is covered by forests. Russia, which has about onequarter of the world’s forest resources, is a major exporter of timber. However, wasteful timber 

policies have caused the industry to move steadily eastward into Siberia, and the per-hectare 

output of Russia’s forests is far behind outputs elsewhere. Insects, forest fires, and industrial 

pollution have reduced stands of timber, and the output of the domestic timber industry declined 

in the late 1990s and early 2000s. However, in the same period exploitation by foreign 

companies and criminal organizations in Siberia has expanded rapidly without adequate 

licensing and control. The Federal Forestry Agency announced a national plan against poaching 

in 2006. Adoption of a new forestry code to address these problems, originally scheduled for 

2005, was delayed again in 2006. In 2005 Russia exported 50 million cubic meters of timber 

products, about one-quarter of its total output. China received about 40 percent of that amount. 

Fishing: In 1991 the Soviet Union was the world’s fourth largest producer of fish. Production 

has declined steadily since that time because of inefficient privatization of the industry and 

pollution in certain fishing areas. Although by 2002 Russia had fallen to eighth in the world in 

fishing output, the export share of the total catch increased to 80 percent in 2001. In 2004 the 

fishing output totaled 3,250 tons, nearly all of which was caught rather than raised by 

aquaculture, compared with 3,720 tons in 2001. The yield from Pacific fisheries, a primary 

source, has been restricted by extensive poaching in Russia’s Far East. 

Mining and Minerals: Russia’s diverse mineral resources have given many of its products a 

strong position in world markets. Of particular economic importance are diamonds, of which in 

2006 Russia accounted for one-quarter of world production; nickel (one-third); cobalt (20 

percent); platinum (40 percent); and aluminum (12 percent). The economic slump of the early 

1990s caused overall production to decrease and the proportion of exports to increase. The coal 
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industry, forced by depleted resources to more northerly and less economical sites, remains a key 

industry in some regions but requires large-scale restructuring. Russia still is second only to the 

United States in coal reserves, however. The oil and gas industries, among the largest in the 

world, provide key export commodities, although transport within the country and conflicts over 

the energy sector’s structure have provided obstacles. The oil industry underwent a major 

restructuring in 2003–4. The government has delayed restructuring the heavily subsidized coal 

sector. 

Industry and Manufacturing: After 1991 Russia’s industrial sector continued to rely heavily 

on defense industries and heavy manufacturing, despite an evident need for diversification. At 

the end of the Soviet era, Russia’s manufacturing infrastructure was decaying and energyintensive, although it produced (and continues to produce) a wide range of chemical, 

metallurgical, and machine-building products, communications and transportation equipment, 

and ships. Lacking the subsidies and captive markets of the Soviet era, the industrial sector in the 

1990s was not internationally competitive. Shortages of investment and human capital were 

other disadvantages leading to a drastic decrease in production, which by 1998 was only 45 

percent of the 1990 level. Especially hard-hit in this period were the consumer goods and 

metallurgy industries. Light industry, of which textiles is the main component, declined because 

of its outdated infrastructure and inability to compete on the world market. In 2005 the majority 

of heavy and light manufacturing categories suffered significant declines in growth rates. 

Between 2004 and 2005, the overall growth rate of manufacturing decreased from 6.1 percent to 

5.7 percent. The food-processing industry showed the greatest growth in productivity in that 

period. 

After a sharp drop in the 1990s, production in the defense sector increased significantly 

beginning in 1999; restructuring of that chronically obsolete sector has concentrated on hightechnology items and products for civilian application. Plans call for the latter outputs to account 

for 70 percent of the defense sector’s production by 2015. Increased foreign sales, particularly to 

China and India, and some increases in domestic military spending have spurred growth. In 2005 

military exports were estimated at US$6 billion. 

Energy: Russia possesses abundant resources for energy production, making it a net exporter of 

electric power and the largest producer of energy in the world. Increasingly, Russia has used this 

position as a geopolitical lever to enhance its influence in the states of the former Soviet Union 

and to influence world energy prices. In 2006 the oil and gas industry contributed as much as 25 

percent of gross domestic product, and oil accounted for 35 percent of Russia’s exports. 

Electric power stations utilize a variety of fuels and energy sources: petroleum, coal, and natural 

gas (together providing 66.3 percent of the total); hydroelectric power (17.2 percent); and 

nuclear power (16.4 percent). Plans call for substantial increases in hydroelectric production in 

the Far East and five new reactors at the 10 existing nuclear plants. In 2006 the system’s total 

generating capacity was about 210 gigawatts. The national electric power grid is divided into 

seven regional systems, all but one of which is fed from a state-controlled monopoly, the Unified 

Energy System. Energy supply problems include wasteful practices in all phases of production 

and supply; long distances between sites of fuel supply and power generation and between sites 

of power generation and consumption; a distribution infrastructure suffering from long-term 
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12

neglect; a dangerously outmoded nuclear power infrastructure; and ownership uncertainty and 

tax pressure on key oil and gas enterprises. 

A 2003 law aimed to restructure the energy sector substantially, including extensive privatization 

of energy provision and elimination of the Unified Energy System. Although major reform of the 

energy industry was not expected until after the 2008 presidential election, in 2006 plans called 

for encouraging foreign investment in generating infrastructure. In the 1990s and the early 

2000s, the oil and gas industries relied largely on existing deposits and infrastructure. As of 

2006, they had built no new refineries for 15 years, and geological exploration ceased entirely 

for several years. Extraction efficiency from existing deposits is extremely low. The dominant 

player in the fuels sector is the Gazprom company, which controls natural gas production, owns 

the gas pipeline system, and has diversified into transport and gas processing as well as 

telecommunications. Gazprom, in which the state holds majority ownership, controls an 

estimated 30 percent of the world’s natural gas reserves. The extensive Shtokman natural gas 

field in the Barents Sea is expected to be productive for as much as 50 years, but Russia has 

delayed exploitation to coincide with increased world demand for liquefied natural gas. Yukos, 

until 2004 Russia’s largest oil company, lost most of its assets during the government’s 

campaign against its president, Mikhail Khodorkovskiy. At that point, an estimated 30 percent of 

oil output came from state companies. The largest such company, Lukoil, is responsible for 18 

percent of production. 

Services: Russia’s services sector has expanded rapidly in the post-Soviet era, contributing 57.5 

percent of gross domestic product (GDP) in 2005. Financial services have expanded especially 

fast during that period. Between 2002 and 2006, total bank deposits increased sixfold. Banking 

remains highly concentrated and dominated by the state-run Sberbank, although by 2005 

Sberbank’s share of total savings had decreased from the 2003 level of 70 percent to 55 percent. 

Bank reform has not yet expanded the basic services offered. A deposit insurance system came 

into full operation in 2005. In 2006 protectionist laws continued to restrict severely the activity 

of foreign banks in Russia. 

Although stock trading grew rapidly in the late 1990s, in the years following the financial crisis 

of 1998 stock sales were not an important source of investment funds for Russian enterprises. 

However, between 2004 and early 2006 stock capitalization increased from 50 percent to 80 

percent of GDP as the market grew rapidly. The insurance industry also grew rapidly in the 

1990s, but in the early 2000s it occupied a substantially less significant position than in Western 

economies, and foreign participation has been limited by restrictive laws. In 2005 about 1,000 

insurance companies were operating, but the 50 largest held 70 percent of policy value. 

In the post-Soviet era, retail services have prospered, expanding annually in value by 9.5 percent 

between 2000 and 2002. However, although many retail companies are established in the major 

cities, most of Russia lacks adequate retail outlets. Even Moscow, the center of retail activity, 

has much less activity than comparable capitals. Outside Moscow and St. Petersburg, outdoor 

markets are the predominant type of retail outlet. In 2005 retail sales totaled US$245 billion, 

about 32 percent of GDP. 
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The tourism industry has grown significantly since the mid-1990s, although activity is 

concentrated in large cities where Western-owned hotels predominate. Less expensive 

accommodations have developed slowly. In 2002 a government tourism development plan aimed 

at easing tourist access and increasing promotion and investment in the industry. In 2004 about 

23 million tourists visited Russia, and tourism contributed an estimated 9 percent of GDP. 

However, beginning in 2004 the introduction of a visa regime by new European Union member 

countries in Eastern Europe reduced tourist visits from those countries. (About 1 million tourists 

had come from Poland in 2003.) The tourist market in China expanded to about 1 million in 2005 

and was expected to increase further, and domestic tourist travel increased steadily in the early 

2000s. An estimated 5 million people work in the tourism industry. 

Labor: Russia’s labor force generally is considered well-educated and skilled, although its 

strengths increasingly are mismatched to the needs of the national economy. In 2005 Russia’s 

active labor force was estimated at 74.2 million individuals. In 2004 the government estimated 

that the number of individuals of working age, 89 million in 2002, would decrease by some 10 

million by 2016. Because the indigenous labor force is shrinking by as much as 1 million 

workers per year, the government considers long-term expansion of the immigrant labor force 

necessary to sustain economic growth. However, that strategy has encountered substantial 

resistance in Russian society. In the early 2000s, non-Russian ethnic groups gained control of 

some sectors. For example, Azeris controlled wholesale fruit and vegetable sales in Moscow and 

other cities. 

In 2005 some 68.3 percent of workers were employed in services, 21.4 percent in industry, and 

10.3 percent in agriculture. The official unemployment rate was 7.6 percent, although because of 

incomplete registration and substantial underemployment the actual figure was believed to be 

considerably higher. Unemployment, which is highest among women and young people, is 

distributed unevenly throughout the country: in 2003 some 1.3 percent of the work force in 

Moscow was unemployed, while the republics of Kalmykia and Tyva, heavily dependent on 

failing industries, reported unemployment rates of more than 21 percent. In 2006 the minimum 

wage, which at its 2004 level of US$20 per month was estimated to cover only 22 percent of 

basic living costs, was raised to US$40 per month. In 2006 average wages rose by 23 percent, 

less than the average increase in the early 2000s, but the average wages of civil service workers 

increased by one-third. 

Foreign Economic Relations: The improvement of Russia’s foreign trade and foreign 

investment positions has been a central policy of the Putin administration. In 2005 Russia took 

major steps toward its most important foreign trade goal, membership in the World Trade 

Organization (WTO). However, in the fall of 2006 the United States continued to block Russia’s 

admission despite intensive negotiations. Among critical issues in the U.S. position were 

copyright piracy in Russia and restrictions on U.S. exports to Russia. 

In 2005 a new agreement extended cooperation with the European Union (EU) in a wide variety 

of economic and security areas and committed the EU to supporting Russia’s WTO membership. 

For the European side, a vital motivation for supporting Russia’s membership was minimizing 

the price of Russian gas and oil upon which EU nations depend. In the post-Soviet era, Russia 

has maintained strong trade relationships with several states of the Commonwealth of 
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Independent States (CIS), especially Belarus, Ukraine, and Kazakhstan. By 2005, however, trade 

with CIS nations had declined steadily to less than 15 percent of the total as trade with the 

countries of the EU increased to more than 50 percent of the total, based on increasingly 

favorable conditions. During the entire post-Soviet era, Germany has been Russia’s highestvolume partner in both imports and exports, accounting for 13.4 percent of imports and 8.0 

percent of exports in 2005. China also accounts for at least 5 percent of both imports and exports. 

In 2005 trade between China and Russia increased by 37 percent to US$29 billion. Italy, the 

Netherlands, Turkey, and Ukraine were Russia’s other largest export customers in 2005, and 

Finland, Italy, Japan, and Ukraine were its other largest sources of imports. 

In the early 2000s, Russia increasingly used demand for its foreign hydrocarbons as a political 

lever. In 2006 Russia raised gas prices for Ukraine, whose democratic government Russia 

disfavored, by about 100 percent, and a new trans-Baltic pipeline will deprive Ukraine and 

Poland, another state at odds with Russia, of fees for overland transit of Russian oil to Europe. 

The scheduled opening of a trans-Siberian oil pipeline in 2008 would significantly re-orient 

Russia’s oil exports toward Asia, which has been identified as Russia’s next great fuel market. 

China and India are the chief customers of Russia’s defense industry. 

Trade Balance: Devaluation of the ruble in 1998 improved Russia’s export situation and began 

an annual trend of trade surpluses. In 2005 exports were valued at US$245 billion, led by 

petroleum products and natural gas, which accounted for 63 percent of the total. Imports were 

valued at US$125 billion, led by machinery and equipment, food and agricultural products, and 

chemicals. 

Balance of Payments: In 2004 all items in Russia’s current account except merchandise trade 

were in deficit, but the overall current account balance was US$60.1 billion, and the overall 

balance of payments was US$46.6 billion. In 2005 the same conditions yielded a current account 

balance of US$84.3 billion and an overall balance of US$65.6 billion. Large-scale capital 

outflow, a major problem in the post-Soviet era, continued to affect the balance of payments in 

2005, totaling a negative US$53 billion compared with the 2004 figure of US$34 billion. Nearly 

half of the 2005 figure was illegal capital flight, a significantly smaller proportion than in 2004. 

In 2004 the balance of net investment income was negative US$12.2 billion, while foreign direct 

investment showed a balance of US$11.7 billion. In early 2006, Russia’s international reserves 

had increased to US$196 billion. 

External Debt: In 1991 Russia assumed the Soviet Union’s outstanding debt of US$67.5 billion, 

but by 1997 additional borrowing had doubled that figure, and international creditors 

rescheduled the debt several times between 1995 and 2001. Since 2001, creditors have increased 

pressure for repayment because of Russia’s favorable trade balance and increasing foreignexchange reserves. At the end of 2004, the external debt totaled US$197.4 billion, but in 2005 

and 2006 Russia used its oil-fed Stabilization Fund to repay substantial amounts to the 

International Monetary Fund and the Paris Club of international lenders. 

Foreign Investment: Compared with the size of Russia’s economy, foreign investment levels 

have remained very low throughout the post-Soviet era. The reasons for this have been an 

unfavorable tax system, corruption, the lack of production-sharing agreements in the fuel sector, 
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and overall economic uncertainty. The United States has been the largest foreign investor in 

Russia, accounting for about one-third of the investment total between 1991 and 2000. A 

significant development in 2003 was British Petroleum’s decision to invest US$6.7 billion in 

Russia’s petroleum industry. Russia’s government policy generally has prevented foreign 

interests from gaining significant shares of the energy industries. According to 2006 legislation, 

foreign firms could obtain only minority ownership of any energy project deemed “strategic.” In 

2006 laws preventing foreign banks from opening branches in Russia remained a significant 

hindrance to Russia’s accession to the World Trade Organization. Total foreign investment for 

2004 was US$40.5 billion, with consumer goods and services and construction receiving the 

largest shares among the economic sectors. In 2005 the figure rose to US$56 billion, with the 

heaviest investments coming from Luxembourg, Cyprus, the Netherlands, Germany, Britain, the 

United States, and France. Foreign direct investment for 2005 was US$16.7 billion. Increases of 

42 percent in overall investment and 44 percent in foreign direct investment, compared with the 

same period in 2005, were reported in the first half of 2006. 

Currency and Exchange Rate: Russia’s currency is the ruble. Between 2000 and 2004, the 

value of the ruble remained steady at around 31 per U.S. dollar. In mid-October 2006, the rate 

was nearly 27 rubles per US$1. In mid-2006, the Duma passed legislation that would make the 

ruble fully convertible. 

Fiscal Year: Russia’s fiscal year is the calendar year. 

TRANSPORTATION AND TELECOMMUNICATIONS

Overview: In the post-Soviet era, Russia’s transportation infrastructure has continued the 

process of deterioration that began in the last years of Soviet governance. The systems also suffer 

from a Soviet administrative design ill-suited to a market economy: modes of transportation are 

vertically integrated, placing control of all aspects, from equipment production to station 

management, under the same authority. That handicap, together with the long distances covered 

by roads and railroads, adverse climatic conditions, and the stress of the post-Soviet transition, 

places Russia in need of massive overhauls in all aspects of its transportation system. Modes of 

ground transport have dominated passenger traffic. According to a 2006 poll, 82 percent of 

Russians have traveled by motor vehicle, 64 percent by railroad, and 15 percent by air. 

Roads: In 2005 Russia had 897,000 kilometers of roads, 762,000 of which were paved but none 

of which could be classified as a Western-style trunk highway. An estimated 40 percent of rural 

villages are not connected to a paved road. In 1999 an estimated 43 percent of federal roads 

(which account for 46,000 kilometers and half of the country’s trucking volume) did not meet 

minimum quality standards because of broken surfaces, poor marking, and poor lighting. Road 

conditions are a major factor in Russia’s very high rate of traffic casualties. The road crisis is 

exacerbated by steady increases in vehicle volume. The Roads of Russia program, established in 

1998, has aimed at large-scale restructuring, including conversion of some federal roads into 

privatized toll roads. In 2004 the program laid out road building plans through 2025, with early 

phases concentrated around Moscow. However, only 2,000 kilometers of new roads were built in 
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2005. A US$2.6 billion investment fund established in 2006 will target infrastructure 

improvement and projects around Moscow and St. Petersburg. 

Railroads: Railroads also are a vital economic link, particularly important for hauling coal, 

coke, ferrous metals, ores, chemicals, fertilizers, grain, and timber products. Largely because of 

increasingly poor long-distance road conditions, between 1992 and 2004 the share of total freight 

haulage by the railroads increased from 34 percent to 43 percent, and in 2005 they carried 80 

percent of Russia’s non-pipeline traffic. Rail transport of oil to seaports increased significantly in 

the early 2000s. The railroads also accounted for 38 percent of passenger transport. In 2005 

Russia had 87,000 kilometers of rail line, nearly all of which was broad gauge, including 46 

percent electrified. An additional 30,000 kilometers of rail line served specific industries. 

Although the government has recognized the need to restructure this system to keep it 

competitive with the improving road system, Russia’s railroads have remained a state monopoly. 

The system is divided into 17 regional railroads, which have a contractual relationship with the 

Ministry of Railways. A restructuring plan adopted in 2001 calls for partial privatization between 

2006 and 2010, with the creation of separate state enterprises for constituent services as an 

intermediate step. Priority projects are improved telecommunications and traffic control and 

modernization of rolling stock. As of 2005, the plan had made little progress, however. In 2005 

six cities had underground rail lines: Moscow, Nizhniy Novgorod, Novosibirsk, St. Petersburg, 

Samara, and Yekaterinburg. 

Ports: The breakup of the Soviet Union deprived Russia of 51 of the 92 marine ports to which it 

had access prior to 1991, necessitating reliance on other former Soviet countries for a large share 

of its seagoing commerce. Remaining Russian port capacity is not sufficient for the current level 

of foreign trade. In 2005 some 43 ports were in operation. The most important ports are St. 

Petersburg and Kaliningrad on the Baltic Sea, Novorossiysk and Sochi on the Black Sea, and 

Magadan, Nakhodka, Vladivostok, and Petropavlovsk on the Pacific Ocean. Two major ports 

above the Arctic Circle, Murmansk and Arkhangel’sk, are closed by ice part of each year. The 

Pacific ports are located far from European industrial and population centers. Demand far 

exceeds capacity at Novorossiysk, the main Black Sea port. Much infrastructure such as port 

cranes and loading machines is in poor condition and does not meet current international 

standards. Major deficiencies exist in freight forwarding systems, cargo processing terminals, 

integration of land and sea transport services, computerization of cargo flow, and cargo 

processing services. Government programs to improve port capacity have come under particular 

pressure from the oil industry’s need for expanded port capacity, and that industry largely 

determines port development policy. A new oil terminal opened at Primorsk near St. Petersburg 

in 2001. Plans call for a new oil port at Perevoznaya Bay on the Sea of Japan as a Pacific 

terminus of the trans-Siberian pipeline scheduled for completion after 2008. Other port 

expansion programs have been delayed because of funding problems. In 2005 Russia’s merchant 

marine had 1,199 ships with a gross registered tonnage of more than 1,000. 

Inland Waterways: Russia has 102,000 kilometers of inland water routes. A system totaling 

72,000 kilometers in European Russia links the Baltic, Black, and Caspian seas and the Arctic 

Ocean. Some 60,400 kilometers of the system have night navigation capability, and 16,900 

kilometers are man-made navigation routes. The main European waterway is the Volga-Don 

system, which connects the major river ports of Nizhniy Novgorod, Kazan’, Samara, Saratov, 
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Volgograd, Astrakhan’, and Rostov with the Caspian Sea and the Black Sea and leads northward 

via canals to link with the Baltic Sea at St. Petersburg. The system links the Don and Volga 

rivers by the 60-kilometer Volga-Don Canal. Expansion of commerce on inland waterways has 

been hindered by shallow water and weather conditions. The Volga-Don Canal is closed for 

several months in winter. 

Civil Aviation and Airports: Air travel decreased sharply in the 1990s; in 2001 passenger 

kilometers were less than 40 percent of the 1990 total. Passenger numbers recovered gradually in 

the early 2000s, increasing by 4 percent between 2004 and 2005 to about 35 million. However, 

in 2006 most domestically produced airliners had been in service for more than 20 years, as the 

aviation industry’s output remained very low and funds for replacement were lacking. Safety 

concerns about the aging fleet accelerated in 2005–6 as crashes increased significantly. Although 

plans call for streamlining the Russian airline industry under a single United Aircraft Building 

Corporation, foreign builders Airbus and Boeing are expected to provide most of Russia’s new 

airliners in the ensuing decade, further damaging the domestic industry. Despite losing its 

monopoly, Aeroflot remained the largest domestic carrier in 2005. Its 90 planes made flights to 

54 countries from the hub city, Moscow, accounting for about 50 percent of Russia’s air 

passenger kilometers. However, in 2005 foreign carriers increased their passengers by 12 

percent, compared with a 2 percent increase by domestic lines. In 2006 Russia had 616 airports 

with paved runways, 51 of which had runways longer than 3,000 meters and 198, runways 

between 2,500 and 3,000 meters. Major international airports are located in Moscow, St. 

Petersburg, Rostov, Yekaterinburg, Novorossiysk, Krasnoyarsk, Irkutsk, Khabarovsk, and 

Magadan. In 2006 some 52 heliports also were in operation. 

Pipelines: Because of the vital role of oil and natural gas in the national economy and the need 

to move those commodities over long distances, pipelines occupy a critical position in the 

national transportation system. The system includes 46,800 kilometers of trunk pipelines, 395 oil 

pumping stations, and 868 storage facilities. In 2005 the overall pipeline system included 

150,007 kilometers for natural gas, 75,539 kilometers for oil, 13,771 kilometers for refined 

products, and 122 kilometers for gas condensate. The state-owned Transneft’ company has 

monopoly control of that system, although the government has proposed privatization of some 

parts of the pipeline infrastructure. Transneft’ is divided into several regional trunk-line 

operating companies. Several major new pipeline projects have been proposed to expedite 

transport to critical ports such as St. Petersburg, Murmansk, and Novorossiysk, relieving 

overloaded lines designated for export. The condition of the pipeline infrastructure has declined 

significantly in recent years; in many areas, maintenance is complicated by permafrost and 

climatic conditions. Modernization and expansion have been hindered by the monopoly positions 

of Transneft’ and Gazprom. A new, 4,000-kilometer trans-Siberian oil pipeline was scheduled to 

begin deliveries to China and the Pacific in 2008 but has been delayed, and a planned Northern 

European line would bypass Poland and Ukraine to increase Russia’s share of the West European 

natural gas market. In 2006 Russia agreed with Bulgaria and Greece to expedite construction of a 

natural gas line connecting Russia’s Black Sea terminal Novorossiysk with Alexandroupolis on 

the Mediterranean Sea via Burgas. 

Telecommunications: In the 1990s, Russia’s telephone system underwent a major transition, as 

more than 1,000 companies gained licenses to provide services. The number of private lines 
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increased sharply during that period, although long waiting periods remained the norm. The 

government’s goal is to add 50 million land lines by 2010. Major developments in recent years 

include increased access to digital lines (mainly in urban centers) and major infrastructural 

improvements. However, the demand for main line service remains unmet, and service outside 

urban centers is inadequate. With extensive foreign investment, substantial growth occurred 

between 2003 and 2005, increasing the ratio of land lines per 1,000 inhabitants from 24.3 to 

29.5. Digital trunk lines connect St. Petersburg on the Baltic with Khabarovsk in the Far East and 

Moscow with Novorossiysk on the Black Sea. Some 60 regional capitals offer modern digital 

systems, but in 2004 an estimated 54,000 rural communities lacked telephone service entirely. 

Driven by slow installation of conventional lines, cellular phone use has increased dramatically 

since 2000. Between 2002 and 2003, the number of cellular subscribers doubled to 36 million; 

by 2005 it had reached 120 million, and mobile telephones accounted for 43 percent of all 

communications services. In 2005 an estimated 60 percent of Russians used cellular phones: 72 

percent of the urban population and 47 percent of the rural population. At the insistence of 

security agencies and the military, the government has postponed privatization of Svyazinvest, 

the state holding company that controls the long-distance monopoly Rostelkom and the 89 

largest regional telephone companies. 

Partly because of difficulties with the telecommunications infrastructure, Internet use has grown 

more slowly in Russia than elsewhere. The scarcity of home computers and high fees have been 

other obstacles. After a period of rapid growth of Internet use, in 2006 the number of users was 

estimated at 24 million; growth has been particularly dramatic in urban centers, especially 

Moscow, Irkutsk, Krasnodar, Nizhniy Novgorod, Novosibirsk, Vladivostok, and Yekaterinburg. 

The government has provided 10,000 public terminals in most regions. Corporate accounts make 

up about two-thirds of Internet use, and e-commerce has not expanded rapidly. 

GOVERNMENT AND POLITICS

Overview: Russia is a democratic federation of 89 subnational jurisdictions, classified as 

republics, oblasts (provinces), autonomous oblasts, autonomous regions, and territories. At the 

national level, the constitution of 1993 calls for three branches of government—the executive, 

legislative, and judiciary—but it does not stipulate equal powers for each. In that system, the 

president of Russia has formidable powers as head of the armed forces and the Security Council. 

Those powers include the authority to appoint a wide variety of government officials without 

effective oversight or check. The houses of the bicameral legislative branch have offered only 

weak opposition because of their constitutional position and because effective opposition parties 

do not exist. The judiciary, a rubber-stamp branch of government under the Soviet system, has 

moved only slowly to assert an independent authority. President Vladimir Putin has used this 

structure to enhance the power of his office and dominate the government. 

Executive Branch: The president, who is the head of state, serves a maximum of two four-year 

terms. However, in 2006, midway in the second term of Vladimir Putin, public opinion favored 

amending the constitution to allow him to seek a third term. The president appoints the prime 

minister (who is head of government), the head of the Central Bank of Russia, and the chairman 

of the highest judicial body, the Constitutional Court. Those nominations require confirmation by 
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the State Duma, the lower house of parliament (the Federal Assembly), although the president 

may dissolve the Duma if it fails three times to confirm a nominee for prime minister. Several 

other top-level presidential nominations, however, require no approval from the legislative 

branch. The president also issues decrees that go into effect without the parliament’s approval. 

Putin, who was elected in 2000 and reelected in 2004, has further improved his position by 

introducing changes that limit the power of the two houses of the Federal Assembly and through 

the plurality of his party in the Duma. There is no vice president; if the president is incapacitated, 

the prime minister succeeds him until a new election is held. 

In 2006 the government, headed by Prime Minister Mikhail Fradkov, included 16 ministries, 

some of which are important policy-making centers. The three “power ministries”—Internal 

Affairs, Defense, and the Federal Security Service, which has ministerial status—are concerned 

with domestic and international security. The Ministry of Finance is the center of national 

economic policy making, and since 2000 the Ministry for Economic Development and Trade, 

which merged several Soviet-era ministries, has assumed a powerful economic policy position 

under German Gref. On many issues, the last two ministries are considered a counterweight to 

the “power ministries.” Also included at “cabinet level” are the director of the Foreign 

Intelligence Service, the chairman of the Central Bank of Russia, and the procurator general, 

who is the chief prosecutor. Several powerful political “clans,” tacitly united under the Putin 

administration, are expected to vie for power when Putin leaves office. 

In late 2005, Putin authorized the 126-member Public Chamber, a new body designed to 

streamline public input into legislation and government policy. The appointive membership of 

the chamber includes accomplished individuals in a variety of civic, academic, and social fields. 

In its first year of existence, the chamber’s 17 specialized committees intervened in several 

major policy areas. 

Legislative Branch: The Federal Assembly is divided into two houses, the Federation Council 

(178 members) and the State Duma (450 members). Members of both houses serve four-year 

terms. The houses have differing responsibilities; the Duma has the more powerful role of 

primary consideration of all legislation. Although the Federation Council has the power to 

review and force compromise on legislation, in practice its role has been primarily as a 

consultative and reviewing body. In the 1990s, the Federation Council was made up of the heads 

of government and the legislative leaders of the 89 subnational jurisdictions into which Russia is 

divided. In 2000 Putin increased his control of the Federation Council by replacing ex-officio 

membership with a process of appointment by the president. The Duma can vote no-confidence 

in a sitting government, but the president can ignore the vote and dissolve the Duma if a second 

such vote is taken within three months. Changes in the constitution require a two-thirds vote in 

the Duma. The Duma elections of December 2003 gave a strong plurality (222 seats) to Putin’s 

United Russia Party, which gained three times as many votes as the second-place Communist 

Party of the Russian Federation. Between that election and mid-2006, United Russia gained 87 

seats as delegates switched party allegiance. In 2006 United Russia had 309 seats; the 

Communist Party, 45 seats; the Liberal Democratic Party of Russia, 35 seats; the Motherland 

bloc of regional parties, 29 seats; and the People’s Party, 12 seats. Independents held 18 seats, 

and two seats were vacant. Some 45 members of the Duma and six of the Federation Council 

were women. 
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Judicial Branch: The judicial branch has moved very slowly toward an independent role in the 

post-Soviet era. The federal judicial institutions are the Constitutional Court, the Supreme Court, 

and the Superior Court for Arbitration. Judges of those courts serve lifetime terms. All federal 

judges are appointed by the Federation Council on the recommendation of the president. The 19-

member Constitutional Court passes judgments on compliance with federal law and the 

constitution and settles jurisdictional disputes between state bodies. The 23-member Supreme 

Court rules on matters of civil, criminal, and administrative law. It is the final stage of the 

appeals system, which begins with local courts of general jurisdiction and includes district and 

regional courts. The specialty of the Superior Court for Arbitration is settling commercial 

disputes. 

Administrative Divisions: Russia is divided into 89 subnational jurisdictions, each of which has 

two representatives in the Federation Council. However, those jurisdictions vary widely in size, 

composition, and nomenclature. They include 21 republics, 49 oblasts (provinces), six territories, 

10 autonomous regions, one autonomous oblast, and two cities (Moscow and St. Petersburg) 

with separate oblast status. The autonomous regions and the autonomous oblast are parts of 

larger subnational jurisdictions. In a first step toward overcoming the complexity of this system, 

in 2000 all of Russia was divided into seven federal districts: Central, Far East, North Caucasus, 

Northwest, Siberia, Urals, and Volga. Within the 89 jurisdictions, the next-largest jurisdictional 

level is the rayon, which is approximately equivalent to a county in the United States. 

Provincial and Local Government: The chief executive of all 89 jurisdictions is the governor. 

In December 2004, the selection method of governors was changed, increasing the power of the 

national executive over subnational governments. Instead of direct popular election in the 

jurisdiction, governors now are nominated by the president, then appointed by the jurisdiction’s 

legislature. The legislature can reject a nominee, but after three rejections the president can 

dissolve the legislature. In 2005 all of President Putin’s more than 30 nominees were approved 

immediately by the respective legislatures. The seven federal districts have governors who are 

appointed by the president. In 2006 a law substantially increased the oversight powers of 

regional governors over city mayors, reducing local governmental powers. A Law on SelfGovernment, expected to be finalized in 2009, is likely to result in interim reform creating large 

numbers of new municipalities, revising the present municipal government structure, and 

increasing the budgetary autonomy of all local jurisdictions. Implementation of some parts of the 

law began in 2004. 

Judicial and Legal System: Civil and criminal cases are heard by courts of general jurisdiction, 

which are subordinate to the Supreme Court and function at district, regional, and national levels, 

with appeals possible to the next higher level. The chief legal representative of the state, the 

procurator general, is nominated by the president and approved by the Federation Council. The 

procurator general appoints equivalent officers for the lower jurisdictions. Military courts are 

included in this system. A second system is the arbitration or commercial courts, which hear 

business-related cases under the national Supreme Court of Arbitration. In 2006 a public justice 

system of about 500 courts went into operation to resolve certain commercial disputes otherwise 

heard by conventional courts. In all but two subnational jurisdictions, justices of the peace handle 

minor criminal cases and some civil cases, sometimes assuming as much as half the judicial 

caseload of the jurisdiction. Some of Russia’s subnational jurisdictions have constitutional 
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courts, which form the third court system under the authority of the national Constitutional 

Court. 

Although Russia has committed itself to thorough reform of the rubber-stamp Soviet judicial 

system, progress in that direction has been slow. Federal judges are nominated by assemblies of 

judges and approved by the president. The Ministry of Justice administers the judicial system, 

naming judges and establishing courts below the federal level. However, in the 1990s many 

judges remained from the Soviet system, and the judiciary became a roadblock for reform 

programs such as privatization and improved human rights. The independence and 

professionalism of judges have been damaged by the minimal pay they have received, and 

funding of the judicial system has been problematic. Although salaries had increased 

substantially by 2005, bribery of judges remains a frequent practice. 

A new Criminal Procedure Code went into effect in 2001. Since that reform, however, 

prosecutors have retained disproportionate power, and in non-jury trials a very high percentage 

of criminal cases result in convictions. Although the law entitles defendants to professional 

representation, defense lawyers are expensive and are lacking in some remote areas. President 

Vladimir Putin frequently has exempted government officials and wealthy businessmen from 

prosecution, even for very serious offenses. Under pressure from the European Union, Russia has 

not applied the death penalty since 1996, although that punishment retains legal standing. 

Beginning in 2004, jury trials have been held for the most serious offenses in all jurisdictions 

except the Republic of Chechnya. That year a new law defined for the first time the role and 

status of jurors. In recent years, clear procedural irregularities have been observed in wellpublicized criminal cases such as the tax evasion trial of oil magnate Mikhail Khodorkovskiy 

(2004–5). In 2006 the Putin government proposed a US$1.8 billion, five-year program to reform 

Russia’s judicial system from 2007 to 2011. 

Electoral System: Suffrage is universal, and the minimum voting age is 18. Elections are 

organized and overseen by the 15-member Central Election Commission. The president, the 

State Duma, and the Federation Council each appoint five commission members to four-year 

terms. According to the constitution, the chairman of that commission, since 1999 Aleksandr 

Veshnyakov, is third in Russia’s leadership line behind the president and the prime minister. The 

89 subnational jurisdictions have equivalent commissions, which in turn oversee some 2,700 

regional election commissions. The president and members of the Duma are elected by direct 

ballot to four-year terms. The last presidential election (normally held in March) was in 2004; the 

last parliamentary elections (normally in December) were held in 2003. The last regional and 

local elections were held in March 2006. The next parliamentary elections are scheduled for 

December 2007, the next presidential election for March 2008. 

In 2006 the single-member constituencies that had elected half (225) of the Duma members were 

abolished, instead awarding all seats according to national party vote totals and eliminating the 

possibility of independents gaining seats. To achieve representation, a party must gain at least 7 

percent of total votes. The presidential election includes a runoff between the top two votegetters if no candidate gains a majority on the first ballot. Direct elections also choose 

legislatures at the subnational levels, although the president has the power to dissolve such 

legislatures and force the holding of new elections. Chief executives at those levels are appointed 
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by the president. National electoral reforms in 2005, all aiming to reduce opposition party 

strength, increased the minimum vote percentage required for a party to be represented in the 

Duma from 5 to 7 percent, prohibited parties from forming electoral coalitions, and stiffened 

party registration requirements. 

Political Conditions and Parties: Aside from the Communist Party, a remnant of the Soviet era, 

Russia has had few political parties with national followings. In the immediate post-Soviet years, 

a wide variety of new parties espoused either some type of Western-style democratic and freemarket reform or retaining a form of the strong central government inherited from Soviet times. 

Parliamentary elections of the 1990s generally fragmented and weakened the reform parties, 

although State Duma legislation in that period most often was the result of compromise. In that 

period, party configurations changed rapidly as groups merged and split. In 2001 the United 

Russia Party was formed, giving the Putin administration an effective voice in the Duma; that 

party’s triumph in the 2003 parliamentary elections enhanced Putin’s position. In those elections, 

the failure of any reform party to exceed the 5 percent minimum diminished the already weak 

political voice of the reform opposition. Ensuing legislation increased the minimum to 7 percent 

and required parties to have at least 50,000 members and organizations in at least half of 

Russia’s regions, further enhancing the dominance of the United Russia Party. The major reform 

parties of the early 2000s, Yabloko and the Union of Rightist Forces, were hindered by the 

electoral reforms of 2005. A third reform party, the People’s Democratic Union, appeared in 

2006. In mid-2006, the reform parties discussed uniting into a single organization to ensure 

representation in the Duma. The Liberal Democratic Party of Russia and Rodina (Homeland) 

parties have nationalist agendas that include abolition of the federal system and expulsion of 

immigrants. In 2005 Rodina was the fastest growing party in Russia, but it was prohibited from 

participating in most regional elections in 2006. 

Mass Media: After strict state control during most of the Soviet era, substantial media 

diversification began in the late 1980s, and during the Yeltsin presidency (1991–2000) most 

issues were discussed openly in the press and in the broadcast media. However, as wealthy 

entrepreneurs concentrated media resources, nonpartisan reporting became increasingly rare. 

Media control by pro-Yeltsin factions was cited as a major factor in Yeltsin’s re-election as 

president in 1996. The role of the broadcast media has become more problematic during the 

Putin presidency. This is especially true because television, which was privatized and expanded 

rapidly in the 1990s, is the chief source of news for most Russians, and virtually all households 

have a television set. 

Since 2000 the Putin administration has exerted strong pressure on independent television outlets 

in an effort to recentralize the media after the diversification of the 1990s. By 2004 all opposition 

television news programming had been forced off the air, and topics such as the Chechnya 

conflict have been covered from the government perspective only. The two largest national 

channels, ORT and Channel One, are state-owned and reach more than 95 percent of Russia’s 

territory. Under new management, NTV, the last major independent television outlet, curbed its 

political commentary in 2004. The government owns the two most powerful radio stations, 

Radio Mayak and Radio Rossiya. In mid-2006, the government greatly reduced the availability 

of Voice of America and Radio Liberty broadcasts over Russian stations. 
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Following the crackdown on the broadcast media, newspapers have been the only source of 

media criticism of the government. As the broadcast media expanded, however, circulation of 

newspapers decreased because of production costs and competition from television, and in the 

early 2000s the number of independent print-media voices diminished steadily. Three 

publications that appeared after 1991, Kommersant, Nazivisimaya Gazeta, and Novaya Gazeta, 

maintained independent positions, although by 2006 the first two had muted their criticism of the 

government. In 2005 Gazprom-Media, the media branch of the state-owned Gazprom energy 

company, purchased the national daily Izvestiya, transforming it from a respected and balanced 

publication to a tabloid newspaper. The other major national newspapers are Argumenty i Fakty, 

Izvestiya, Komsomol’skaya Pravda, Moskovskiy Komsomolets, Moskovskiye Novosti, Pravda, 

and Trud. The Moscow Times and the St. Petersburg Times are major English-language 

newspapers. Outside Moscow and St. Petersburg, newspapers are controlled by local 

governments, most of which under the present political system are loyal to the Putin 

administration. In the early 2000s, free newspapers devoted mainly to advertising expanded their 

readership quickly in the large urban centers. The principal news agencies are ITAR–TASS, RIA 

Novosti (both government-owned), and Interfax. All major foreign news agencies have offices in 

Russia. Since 2001 several print journalists have been attacked or killed, allegedly because of 

their writings. 

Foreign Policy: In the post-Soviet era, Russia’s foreign relations have gone through several 

stages. In the early 1990s, Russia sought friendly relations with virtually all countries, especially 

the West and Japan. By the mid-1990s, a nationalist faction discouraged relations with the West 

in favor of renewed influence in the “Near Abroad” (the territory of the former Soviet Union) 

and closer ties with China. The two contradictory approaches have defined Russia’s foreign 

policy since that time. In the mid-1990s, the expansion of the North Atlantic Treaty Organization 

(NATO) and the first of two conflicts with the Republic of Chechnya strained relations with the 

West. The September 11, 2001, terrorist attacks realigned Russia with the United States, but new 

strains came from the continuation of the second Chechnya conflict, Russia’s support of Iran’s 

nuclear program, and Russia’s failure to support the U.S. invasion of Iraq in 2003. Meanwhile, 

Russia improved its position in the Near Abroad by strengthening relationships with Armenia, 

Azerbaijan, Kyrgyzstan, and Tajikistan and maintaining bases in Moldova and Georgia. In 2005 

relations with Uzbekistan improved as that country reversed its earlier movement toward the 

West. Relations with Ukraine deteriorated after Ukraine elected a Western-oriented president in 

2004 and Russia raised natural gas prices in 2005. Tension with Georgia increased in mid-2006 

as Russia backed the demands of separatists in Georgia’s South Ossetia region. Russia has used 

its role as natural gas supplier to gain leverage over both Georgia and Ukraine. Intensifying its 

commercial and diplomatic role in Asia, Russia has been a strong supporter of the six-nation 

Shanghai Cooperation Organization, which it sees as a key factor in blocking U.S influence in 

Central Asia, and it has improved relations with North and South Korea and China in a number 

of areas. However, in 2006 Russia’s insistence on maintaining control of the Kuril Islands, a 

reversal of recent conciliation, chilled relations with Japan. 

In the early 2000s, the Putin Administration continued to attempt a balance between restoring 

Russia’s influence in the Near Abroad (particularly Central Asia, the Caucasus, and Ukraine) and 

preserving positive relations with the West, which has looked with disfavor on Russia’s 

nationalistic ambitions. In that period, Russia’s perceived support of regimes in Iran and Syria, 
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Western support for successful democratic movements in Georgia and Ukraine, Western 

criticism of Putin’s policies toward Chechnya, and restriction of nongovernmental organizations 

and the media were issues that damaged the bilateral rapport achieved in 2001. In August 2006, 

the United States irked Russia by imposing sanctions on two Russian arms companies for their 

dealings with Iran. In 2006 Russia made progress in negotiations for membership in the World 

Trade Organization, but some issues caused the United States to delay approval of Russia’s 

membership. The continued existence of the U.S. Jackson–Vanik Amendment, which originally 

linked U.S.-Soviet trade with the Soviet Union’s emigration policy for Jews, also is a source of 

tension. In mid-2006, Russia enhanced its international prestige by hosting the annual Group of 

Eight summit meeting. Russia has used its veto power in the United Nations Security Council to 

influence international responses to crises in Iran, Sudan, and the Middle East. 

Membership in International Organizations: Russia is a member of numerous international 

organizations, including the Arctic Council, Asia Pacific Economic Cooperation [sic], 

Association of Southeast Asian Nations (ASEAN, as a dialog partner and member of the 

ASEAN Regional Forum), Bank for International Settlements, Black Sea Economic Cooperation 

Pact, Central Asian Cooperation Organization (since 2004), Commonwealth of Independent 

States, Council of Baltic States, Council of Europe, Euro-Atlantic Partnership Council, European 

Bank for Reconstruction and Development, Group of Eight, International Atomic Energy 

Agency, International Bank for Reconstruction and Development, International Civil Aviation 

Organization, International Criminal Police Organization, International Federation of Red Cross 

and Red Crescent Societies, International Labour Organization, International Maritime 

Organization, International Monetary Fund, International Organization for Migration (as an 

observer), International Telecommunication Union, North Atlantic Treaty Organization, 

Partnership for Peace, Nuclear Suppliers Group, Organization for Security and Co-operation in 

Europe, Paris Club, Shanghai Cooperation Organization, United Nations Committee on Trade 

and Development, United Nations High Commissioner for Refugees, United Nations Industrial 

Development Organization, United Nations Institute for Training and Research, United Nations 

Security Council, Universal Postal Union, World Health Organization, and World Trade 

Organization (as an observer). 

Major International Treaties: Russia is a signatory to numerous multilateral treaties, including 

the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and 

Their Disposal; Convention on Long-Range Transboundary Air Pollution; Convention on the 

International Trade in Endangered Species of Wild Flora and Fauna; Convention on the 

Prevention of Marine Pollution by Dumping Wastes and Other Matter (London Convention); 

Convention on the Prohibition of the Development, Production, and Stockpiling of 

Bacteriological (Biological) and Toxin Weapons and on Their Destruction; Convention on the 

Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and on 

Their Destruction; Geneva Convention (1949); International Convention for the Regulation of 

Whaling; International Covenant on Economic, Social and Cultural Rights; International 

Tropical Timber Agreement; Montreal Protocol on Substances that Deplete the Ozone Layer; 

Ramsar Convention; Treaty Banning Nuclear Weapons Tests in the Atmosphere, in Outer Space, 

and Under Water; Treaty on the Non-Proliferation of Nuclear Weapons; United Nations 

Convention on the Law of the Sea; and United Nations Framework Convention on Climate 

Change and its Kyoto protocol. Russia also has signed a number of bilateral arms control treaties 
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with the United States on the limitation of strategic arms, antiballistic missile systems, and 

underground nuclear weapons tests and on the elimination of intermediate-range and shorterrange missiles. 

NATIONAL SECURITY

Armed Forces Overview: The main branches of Russia’s armed forces are the ground forces, 

navy, air forces, and strategic deterrent forces. In 2005 Russia had 1,027,000 active military 

personnel and about 20 million reservists. Of the active-duty personnel, about 250,000 were 

conscripts. The number of women has increased since contract service was introduced; estimates 

of their numbers varied from 115,000 to 160,000. Some 395,000 personnel were in the army, 

142,000 in the navy (including 35,000 in naval aviation), 160,000 in the air forces, and 80,000 in 

the strategic deterrent forces, whose total manpower of 129,000 also included 38,000 air force 

and 11,000 navy personnel. About 40,000 of the strategic deterrent forces were classified as 

strategic missile force troops. Another 250,000 active personnel were designated for command 

and support duties. Russia has an ongoing military reform program that is to include streamlining 

and professionalization of all units—goals widely recognized as necessary to meet Russia’s postSoviet military needs at a time when the military manpower pool is diminishing. However, troop 

dissatisfaction and low funding have hampered expansion of this program beyond individual 

units. Reforms also may rearrange the military districts and the status of the main branches. The 

Chechnya conflict, which decreased in intensity in 2006, damaged morale throughout the 

military and exposed planners’ inability to adapt existing doctrine to nonconventional combat. 

Domestic ground forces are divided into six military districts: Moscow, Leningrad, Volga, North 

Caucasus, Siberian, and Far Eastern. The navy is divided into four fleets (Northern, Black Sea, 

Pacific, and Baltic) and the Caspian Sea Flotilla. A new military doctrine was scheduled to 

replace the existing (2002) doctrine in 2007, enumerating more precisely Russia’s national 

security position and the threats to it. 

Foreign Military Relations: In the early 2000s, China and India have been the top customers 

for Russia’s military exports, which in 2005 reached a new high of US$6.1 billion. In 2005 

Russia and China held their first-ever joint military exercises on the coast of China’s Shandong 

Province, and in 2006 plans called for continued sales of advanced arms to China. A treaty with 

the Association of Southeast Asian Nations includes a security partnership section. India plans 

extended military cooperation with Russian forces after conducting large-scale bilateral naval 

exercises in 2003. In the early 2000s, Russia intensified its military links in Central Asia. A 

comprehensive defense treaty with Uzbekistan in 2004 was followed by a 2005 mutual defense 

treaty. Bilateral defense treaties with Tajikistan ensured the long-term presence of the Russian 

troops that have been in Tajikistan throughout the post-Soviet era. In 2006 Russia tripled the 

number of aircraft stationed at its air base at Kant in Kyrgyzstan. 

In 2005 and 2006, Russian forces participated in various joint exercises with forces of Armenia, 

Canada, India, Kyrgyzstan, Sweden, Turkey, and the United States. In early 2006, joint naval 

and antiterrorism exercises were held in the Ionian Sea to evaluate the interoperability of North 

Atlantic Treaty Organization (NATO) and Russian systems. The NATO–Russia Council 

provides Russia input into NATO policies, with the goal of alleviating stress over NATO 
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expansion eastward. Russia is a signatory of the Global Partnership Against the Spread of 

Weapons and Materials of Mass Destruction. Russia receives aid from the United States, the 

United Kingdom, and the European Union for destruction of its chemical weapons in accord with 

the Chemical Weapons Convention. The Multilateral Nuclear Environmental Programme in the 

Russian Federation provides for European assistance projects in nuclear waste disposal. 

External Threat: No conventional external threat exists. However, the stepwise expansion of 

the North Atlantic Treaty Organization (NATO) into Eastern Europe and the three Baltic states 

of the former Soviet Union has caused irritation in Russia, some of which has been alleviated by 

participation in the NATO–Russia Council and by a NATO promise not to deploy nuclear 

weapons in the new member countries. 

Defense Budget: Russia’s military outlays, particularly allocations among defense 

subcategories, are difficult to assess. Reportedly, the 2005 budget increased direct military 

spending by 28 percent over the 2004 total. Overall, between 2002 and 2005 estimated defense 

budgets increased from US$8.4 billion to US$17.7 billion. However, experts see drastic 

increases in the early 2000s as compensation for the substantial underfunding of the military in 

the late 1990s. Russia’s high inflation also plays a role in the nominal increases. The military 

budget for 2006, calling for US$22.3 billion, was 25 percent larger than its predecessor, with a 

stronger emphasis on research and development and acquisition of arms and equipment. 

However, reorganization of national budget classifications in 2005 added some new types of 

expenditures to the traditional national defense categories. Among the latter, another US$4.5 

billion was budgeted in 2006 for support functions such as military housing, health, and 

education. The draft budget for 2007 called for an increase of 23 percent in military spending, to 

US$30.4 billion. Increases targeted arms purchases, research and development, and a 10 percent 

pay raise for military personnel. 

Major Military Units: The army has 5 tank divisions, 16 motorized rifle divisions, 4 airborne 

divisions, 5 machine gun and artillery divisions, 3 artillery divisions and 4 independent artillery 

brigades, 9 special forces brigades, 12 surface-to-surface missile brigades, 11 surface-to-air 

missile brigades, 5 antitank brigades, and 1 engineer brigade. The navy is divided into four 

fleets: the Baltic, Black Sea, Northern, and Pacific, each with its own fleet air force, plus the 

Caspian Sea Flotilla. The naval infantry (marines), 9,500 strong, includes three independent 

brigades and three special forces brigades. The air force is divided into two commands, the Long 

Range Aviation Command (57th Air Army) and the Military Transport Aviation Command (61st

Air Army). The former command includes eight bomber regiments, the latter nine regiments. In 

addition, tactical aviation forces consist of five tactical and air defense armies totaling 49 air 

regiments. The strategic missile force is divided into three rocket armies. 

Major Military Equipment: In the early 2000s, large numbers of major equipment items had 

outlived their service life, and replacement occurred at a much slower rate. In 2005 the army had 

22,800 main battle tanks; 150 light tanks; 2,000 armored reconnaissance vehicles; 15,090 

armored infantry fighting vehicles; 9,900 armored personnel carriers; 30,045 artillery pieces, 

including 6,010 self-propelled pieces, 6,100 mortars, and 4,350 multiple rocket launchers; 200 

nuclear-capable surface-to-surface missiles; and 2,465 surface-to-air missiles. The navy had 46 

tactical and 15 nuclear submarines, 1 aircraft carrier, 6 cruisers, 15 destroyers, 19 frigates, 26 
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corvettes, 41 mine warfare vessels, 22 major amphibious vessels, and 72 patrol and coastal 

combat vessels. The navy also had 266 combat aircraft. The air forces had 1,013 fighter aircraft, 

677 bombers and ground-attack fighters, 119 reconnaissance aircraft, 293 military transport 

aircraft, and 1,520 helicopters. The strategic missile force had 570 launchers with 2,035 nuclear 

warheads. In 2006 the missile force added a first unit of advanced mobile Topol–M missiles. 

According to plans, that missile was to be the basis of significant new reliance on the missile 

force for conventional and antiterrorist defense in the period 2007–11. The nuclear submarines 

were equipped with a total of 252 missiles. In 2006 two new nuclear submarines carried Bulava 

missiles, Russia’s first new intercontinental ballistic missile model in the post-Soviet era. 

Military Service: Males between ages 18 and 27 are eligible to be conscripted for terms of 18 to 

24 months. The reserve obligation extends to age 50. Legislation in 2006 called for the term of 

active duty to be reduced to one year in 2008. In recent years, the quantity and quality of recruits 

have dropped dramatically because of the Chechnya conflict, low pay, and adverse service 

conditions. In the air force draft of spring 2006, only 20 percent of conscripts were found fit for 

combat units. The tradition of hazing new recruits drew increased public criticism in the early 

2000s, but the practice continued to discourage enlistment. In mid-2006 the Ministry of Defense 

announced that the first phase of the plan to create an all-volunteer armed force would conclude 

in 2008, with special emphasis on professionalizing the rank of sergeant (to reduce hazing) and 

personnel in airborne units and units designated for conflict. However, in 2006 large numbers of 

early contract cancellations reduced the prospects of meeting program goals. 

Paramilitary Forces: In 2005 a total of 415,000 individuals were on active duty with 

paramilitary forces. This total included 160,000 in the Federal Border Guard Service, 170,000 in 

the five paramilitary divisions of the Ministry of Internal Affairs, and about 4,000 in the Federal 

Security Service. The Federal Protection Service, including the Presidential Guard Regiment, 

includes 10,000 to 30,000 troops. In 2006 the Federal Security Service added 300 

counterterrorist personnel. 

Military Forces Abroad: In 2006 Russian forces were stationed in several countries of the 

former Soviet Union: Armenia, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, and Ukraine. 

The presence of Russian forces, ostensibly as peacekeepers, in the separatist republics of 

Abkhazia and South Ossetia was an ongoing irritant in relations with Georgia. Russia has 

provided troops or observers for several United Nations (UN) peacekeeping groups: the Interim 

Administration Mission in Kosovo; the Mission for the United Nations Referendum in Western 

Sahara; the Mission in Ethiopia and Eritrea; the Mission in Sierra Leone; the Observer Mission 

in Georgia; and UN operations in Burundi, Congo, and Côte d’Ivoire. 

Police: Russia’s civilian police force, the militia, falls under the Ministry of Internal Affairs. 

Divided into public security units and criminal police, the militia is administered at federal, 

regional, and local levels. Security units, which are financed by local and regional funds, are 

responsible for routine maintenance of public order. The criminal police are divided into 

specialized units by type of crime. Among the latter units are the Main Directorate for Organized 

Crime and the Federal Tax Police Service. The latter agency now is independent. Since its 

establishment, the militia has been plagued by low pay, low prestige, and a high corruption level. 

The autonomous Federal Security Service, whose main responsibility is counterintelligence and 
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counterterrorism, also has broad law enforcement powers. In early 2006, President Putin called 

for a wholesale review of police practices at the city, district, and transport levels. 

Internal Threat: Increasingly sophisticated national and transnational criminal organizations are 

extremely active throughout Russia, especially in the Far East, Yekaterinburg, Moscow, and St. 

Petersburg. Criminal organizations control the trafficking of a wide variety of commodities. In 

urban centers, protection rackets prey on legitimate businesses. Russia is a vital link in narcotics 

smuggling from Afghanistan through Central Asia to Western Europe. Important factors in crime 

are government and police corruption, a growing domestic narcotics market, a weak judiciary, 

ineffective border controls, and the open, chaotic nature of post-Soviet commercial activity. 

Throughout the early 2000s, extremist nationalist groups such as the skinheads proliferated all 

over Russia, and the number of attacks on minority individuals increased sharply in 2005 and 

2006. In 2006 skinhead membership was estimated at 70,000. In recent years, Russia’s financial 

institutions have suffered a drastic increase in computer crimes. The 2005 federal budget 

substantially increased funds for security and law enforcement activities. 

Insurgency and Terrorism: In 1999 a series of bomb attacks in population centers was 

attributed to Chechen separatists, leading to the resumption of conflict between Russian forces 

and Chechen guerrillas. In 2001 Russia strongly supported U.S. actions in response to the 

September 11 attacks, a position that brought the countries closer. In 2002 Chechen terrorists 

took about 600 Russians hostage in a Moscow theater, sharpening Russia’s anti-Chechen and 

antiterrorism policy. Between 2002 and 2004, terrorist attacks in Russia killed an estimated 500 

people. In May 2004, Chechen rebels assassinated Akhmad Kadyrov, the pro-Russian president 

of the Republic of Chechnya, and in September 2004 Chechen terrorists led by Shamil Basayev 

killed about 320 hostages at a Russian school in Beslan, near the border of Chechnya. In July 

2006, Russian troops killed Basayev. Basayev’s alleged links with al Qaeda and other foreign 

terrorist groups were uncertain. Basayev’s death and the rise of Kadyrov’s charismatic son as 

leader of Chechnya were expected to diminish the longstanding Chechen insurgency. The main 

remaining insurgent group, led by Dokka Umarov, staged terrorist attacks throughout the North 

Caucasus region in 2006. Throughout the early 2000s, the dubious security of Russia’s 

substantial stock of nuclear materials caused international concern that a terrorist organization 

might obtain such materials in Russia. The 2005 budget substantially increased funds for 

Russia’s antiterrorism programs, and in 2006 the Federal Security Service established 

counterterrorism committees at the national and regional levels. 

Human Rights: The constitution of 1993 guarantees broad freedoms of speech, assembly, fair 

trial, and the press, as well as protection against deprivation of liberty and inhumane punishment. 

However, in practice many of those guarantees have been withheld. Human rights observers 

have reported the use of torture in prisons and against prisoners in the Chechen conflict. Police 

violence and extortion have been concentrated against Caucasian, Central Asian, and Roma 

individuals. Military servicemen continue to suffer violent “hazing” rituals. Prison conditions in 

general are harsh, and rates of death and contagious diseases such as tuberculosis and human 

immunodeficiency virus (HIV) among prisoners are very high. In 2004 some measures were 

taken to reduce prison overcrowding. 
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Arbitrary arrest and detention are frequent, and pretrial detention often is lengthy. However, 

authorities have increasingly complied with the detention limitations of the 2003 Criminal 

Procedure Code. The chief national law enforcement agency, the Federal Security Service, 

receives limited oversight by the federal procuracy and the courts. Ongoing, unrestricted use of 

force by troops against civilians in the Chechen conflict has been documented, despite 

restrictions on press coverage. Some religious groups have faced regional government 

restrictions under a 1997 law that regulates religious practice. Instances of prejudice and violence 

against Jews, Muslims, and other minorities increased in 2004. Nontraditional religions such as 

Jehovah’s Witnesses and splinter Muslim groups have been deprived of official status, 

sometimes on security grounds. Recent national elections have been conducted fairly, but 

government control of the media has been criticized during campaigns, and interference with 

journalists has been common. The treatment of displaced persons in the Chechen conflict has 

come into question. Nongovernmental organizations (NGOs) have felt pressure and been 

subjected to occasional violence if they take controversial positions. In 2006 a controversial new 

agency, the Federal Registration Service, established a complex registration procedure for the 

estimated 400,000 foreign and domestic NGOs in Russia. As of October 2006, large numbers of 

significant NGOs had failed to fulfill agency requirements. 

Crimes against women, including domestic violence and trafficking (both domestic and to other 

countries), are frequent. Because there is no law against sexual harassment, women have no 

recourse in such situations. Child abuse and trafficking in children also are significant problems.