For current reports go to EASY FINDER




Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 433,491 346,520 310,000 16
GNI per capita
 US $ 2,610 2,140 1,750 97
Ranking is given out of 208 nations - (data from the World Bank)

Books on Russia


Update No: 364  (26/04/11)

The coming presidential elections
There is a flurry of elections coming up world-wide, including Russia – and, it so happens the US and Turkey – all three major players on the world stage.

Of the five permanent members of the UN Security Council, excluding China, only the UK's PM David Cameron does not face this predicament, which perhaps accounts for his forward policy in Libya, in effect sending in the marines and an unrevealed number of the SAS, on the ground to train and organise the rebels - under the guise of humanitarian aid.

President Dimitry Medvedev is in the spotlight here. He faces re-election in 2012, bar a sudden change of heart by Premier Vladimir Putin. But Putin finds the present arrangement fine. Everybody knows that he is really the man in charge.

There is a ban on presidents going on beyond two terms, in the US and elsewhere, one that has bizarrely been recognised recently by Rauol Castro, brother of Fidel Castro, for Cuba.

It is rather curious since it came in after Roosevelt, who was elected for four terms. He was generally agreed to be the most successful US president ever, conquering the 1930s Great Depression and then the Japanese and the Nazis in World War Two. But there you are - that is democracy for you – the people are never satisfied.

What is on course is that Putin comes back as president in 2016, to be returned in 2020, after which can come another presidency of Medvedev, 2024-2032.
This may turn out to be futuristic phantasy of course. Anything can come along and upturn the ship of state. Who knows what strange outcome the future of an extraordinary country like Russia might take?

As the saying former US president Clinton, facing re-election in 1996, had pinned on his wall: - “It's all a question of the economy - stupid.”

Major deals ahead
Buoyed up by a series of major new business developments, Russia's leadership is now seeing returns on efforts to modernise the country and enhance foreign investor appeal. At the annual Davos fanfare, President Dmitry Medvedev had a string of billion dollar-plus deals to show off as he took the podium at the World Economic Forum in January.

Oil major BP’s share swap deal with state-controlled oil company Rosneft kicked off 2011 with the same message that PepsiCo’s record-breaking $3.8bn investment into juice-maker Wimm-Bill-Dann offered at the end of last year: Russia is a “must-do” investment for leading strategic investors.

The two deals have been welcomed by the Kremlin, which last year launched a major initiative to modernise the country by luring large investors that bring not just cash, but badly needed technology and management skills. BP's deal has struck problems, however, of which more later.
Russia has a relatively poor track record in attracting FDI, weighed down by a reputation for bureaucracy, corruption and poor corporate governance and a distrust of their civil courts. While the levels of FDI started to recover to a total of $40bn in 2010, the second highest among all emerging markets, it is still half that of 2008, according to UNCTAD.

However, the pace picked up fast at the close of last year. A third of global M&A deals were struck in emerging markets in 2010, but Russia closed $34bn of transactions in the last quarter of the year alone, on a par with the $38bn of China (which has a much bigger economy) and well ahead of Brazil and India.

Modernisation has been promoted to the top of Russia’s political agenda after the 2008 economic crisis exposed the flaws of the economic model built since 2000. “The slump proved that the model was not capable of delivering stable long-term growth,” said Roland Nash of Verno Capital.

Foreign investors can import more efficient management, expertise and technology. At the same time, they bring capital and competition to spur growth. The twin BP and PepsiCo deals are key, as they will bolster the confidence of other strategic investors to buy into Russia.

However, many commentators were more concerned with the government’s entry into the capital of BP through the stock swap. “Very few see this deal for what it is - the next logical step in the modernisation of Russia, and a milestone in attracting large-scale foreign direct investment (FDI) into the Russian economy,” says Plamen Monovski, chief investment officer at Renaissance Assets.
Speaking in Davos, BP chairman Carl-Henric Svanberg said: “We are being asked what has changed in Russia, why now all these deals are being signed. The regulations have changed considerably.”

Indeed, while the total volume of deals remains depressed, the size of the deals is increasing as strategic investors commit themselves, eyeing Russia’s abundant natural resources and population of 143m.

Analysts expect the pace to pick up this year, and Mr Medvedev attended the signing of another $1bn joint venture between Exxon Mobil and Rosneft at the forum itself.

“The deals don’t necessarily mark a turnaround in sentiment,” suggested Pavel Sorokin, an analyst at investment bank Alfa, “but they may be a first step. “These deals are being made in strategic enterprises which are pillars of the Russian economy.”

Last year’s focused drive for hi-tech arrivals has drawn pledges from a slew of big names, including IBM, Siemens, Philips, and Microsoft, to open R&D facilities. This year, the hot sectors are likely to be transport and infrastructure: late January saw a plan to build a £42bn high-speed rail network in time for the 2018 World Cup, with private companies contributing a third of the finance.

From out-house to household
Russia is best known for its treasure trove of natural resources, but the PepsiCo deal highlights the fact that Russia’s emerging middle class is now capturing the attention of major multinationals. Indeed, PepsiCo has become Russia’s biggest food producer as a result of the deal.

Italian bank UniCredit, which moved into Russia several years ago, is also rapidly expanding to tap into the pool of household money. It has announced that, in January, it will add hundreds of retail branches. Thomas Cook Group travel company has also taken the plunge into a country widely predicted to become the biggest consumer market in Europe within a decade.

The low level of investment into Russia is closely connected to its poor international image. However, experts say investors need to be more discerning; while the risks of doing business in Russia are real, they are not universal.

The Japanese debacle
The Russians are balefully aware of their vulnerability to future shocks by reason of what is happening in Japan, a country for which they have a particularly high regard. It is an efficient and attractively diverse country and people, misled by fools in the Second World War.

An awful event has supervened – or rather a compound of events, an earthquake, a tsunamai and a nuclear catastrophe no less, of which the Russians have the experience of Chernobyl. The Fukushima plants have imploded, under the impact of the earthquake and a consequent tsunamai.

Some 10,000 are reckoned to be dead, with 16,000 seriously injured.

As the catastrrophe unfolds, Russia, with its proximity to Japan and vivid memories of the 1986 disaster at Chernobyl, is following developments more closely than most. The question on the minds of Russian experts, and much of the world’s population, is: how bad will this get before it gets better?

The good news is that there appears to be no immediate threat of a Chernobyl-scale disaster for Japan and neighbouring countries, according to the crisis centre at Rosatom, Russia’s state nuclear energy corporation. Rosatom has been monitoring the situation since the devastating earthquake and tsunami struck on March 11. “The equipment proved even more reliable than we could have expected. It has coped quite well,” said Rosatom’s director general, Sergei Kirienko, whose organisation has offered assistance to the Japanese. The situation at the fifth and sixth reactors at Fukushima has been stabilised, Mr Kirienko said, and the threat of disaster at other reactors was receding.

The bad news is that the plant is still emitting radiation. Gaseous fission material is being emitted into the atmosphere with steam and dust, which is being carried over long distances. And much radionuclide-contaminated water, which is used to cool the reactors, is flowing back into the ocean along with spent nuclear fuel.

Atmospheric currents are moving mostly from the Japanese coast into the Pacific Ocean and towards North America, where minuscule traces of radiation have already been detected in Washington and California. In Europe, the first traces of radioactive iodine thought to originate in Japan were registered in Iceland, detected by radiation monitoring stations operating under the Comprehensive Nuclear Test Ban Treaty Organisation. Patrol missions have been set up at 63 points around the world, 15 of which have traced radioactive particles to Fukushima.

The International Atomic Energy Agency (IAEA) says that radiation levels detected so far pose no threat to human health and do not require any preventive measures. But it is believed they could potentially trigger ailments among some people at a psychological level.

At the disaster scene, radiation levels within the 30km (19-mile) evacuation zone were still 1,000 times above normal, although experts said the situation was manageable. “This is not at all a meltdown – if that had happened we would be seeing a completely different radiation picture at the site and outside it,” said Alexander Bychkov, deputy director of the IAEA.

The disaster, triggered when the tsunami swamped infrastructure around the six reactors at Fukushima, came six weeks before the 25th anniversary of the explosion of the fourth reactor at Chernobyl on April 26, 1986.

Caused by human error rather than nature, the meltdown at the Ukrainian plant was the worst incident in the history of nuclear power generation. The explosion of the reactor and subsequent fire emitted huge amounts of radioactive substances into the atmosphere and contaminated much of Europe. At least 4,000 people are believed to have died as a result of the disaster, according to the World Health Organisation, and the health of tens of thousands was damaged. The last operating reactor at Chernobyl was only permanently shut down in December 2000.

By contrast, the situation at Fukushima more closely resembles the loss-of-coolant accidents at the Hungarian Paks plant in 2003, and America’s Three Mile Island site in 1979.

In the broader picture, the nature of the Japanese disaster has implications for industries other than nuclear power generation, according to Nikolai Laverov, the vice-president of the Russian Academy of Sciences. “We cannot develop dangerous industries without due consideration of natural processes. The worst catastrophes in recent years, some with huge numbers of human victims, have been triggered by the water element, so we should think carefully before deciding to situate new atomic power plants and large oil refineries in coastal zones.”

The Japanese disaster had provided a case study of how large oil-refining facilities would burn when affected by the elements, said Mr Laverov. He added: “This will deliver a colossal blow to the ecology, to say nothing of the 
economic damage.”

The death toll in Japan is 10,800 with 16,000 missing and the economic cost is put at $205bn (£129bn).

Whether Tokyo will yet call on Russian experience to help control the reactors was unclear, but help was at hand, officials in Moscow said.

“Rosatom is ready to help Japan resolve the situation at the crippled atomic power plant Fukushima-1, should we receive such a request,” said Sergei Novikov, head of communications at Rosatom. “As soon as our Japanese colleagues tell us what help they need, naturally, we will respond immediately.”

The Russian leadership responded to the disaster by ordering safety checks at all of its own nuclear plants and those built for foreign governments. But there would be no retreat from nuclear power expansion plans, Mr Novikov said.

The Fukushima syndrome
The tragedy in Japan has once again raised doubts about peaceful nuclear energy and has rattled the entire planet. Reaction has been strongest in Europe, where about 150 nuclear reactors are operating (more than a third of all the reactors in the world). Immediately after the explosion at Fukushima-1, Europeans took to the streets demanding an end to the use of atomic energy, and their governments heeded their pleas. German Chancellor Angela Merkel announced the temporary closure of all nuclear power plants built before 1980. Switzerland and France decided to make changes to their nuclear plans. The Fukushima syndrome also affected the US and a number of Asian countries, particularly Thailand.

But Russia took a different stance. The country's officials said they do not intend to abandon plans to increase the country's nuclear capacity. In addition, some projects will be completed ahead of schedule. Rosenergoatom intends for the percentage of electricity produced through nuclear fission to increase from 16 to 25% in 20 years, by building 26 new reactors.

The only concession the Russian government made to the Japanese tragedy was to conduct stress tests on nuclear power plants (to check fire and radiation safety and seismic stability). The results of these tests will be known in a few months.

« Back


Published by 
Newnations (a not-for-profit company)
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774