He had just returned from the second of two recent trips to Moscow and St. Petersburg. Balzer's fellowship project focuses on Russia's new middle class and its potential impact on the development of Russian democracy. Perhaps half of personal income is generated in Russia's 'alternative' economy and is not showing up in statistics. The middle class includes lawyers, accountants, and securities industry employees. Even the Russian press now refers to this new middle class.
Crime is one of the major factors that perpetuates a shadow economy and thus a shadow middle class.
This is so in part because people hide their income to avoid paying taxes or attracting the attention of the mafia. Westerners need to use a different yardstick for judging Russian society than for other societies because of all the upheaval the country has gone through, Balzer said. At the same time there has been a significant shift in political power from the Duma to the Federation Council. Alexander Lebed, Boris Yeltsin's former National Security Council head, is considering a run for governor in Tula, which would give him a place in the council, perhaps the best platform from which to launch a presidential bid in the next national election. In the meantime, Balzer said, Lebed could help turn the council into a more powerful institution in setting a direction for the country.