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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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)

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Update No: 390 (26/10/13)

Summary: Russia is baring its teeth over the Greenpeace demonstration against Arctic oil exploration, putting the squeeze on Lithuania ahead of trade talks between the EU and six former soviet states and losing its supremacy in oil production. At home, anti-immigration riots threaten to further fracture Russia's multi-ethnic society.

The Kremlin is attempting to show the international community that it won't tolerate criticism and breaches of its territory by detaining members of Greenpeace who were protesting against oil drilling in the Arctic. On 19 September, Russia arrested, at gunpoint, 28 activists and two freelance journalists who were aboard the Dutch-registered Greenpeace vessel “Arctic Sunrise” during a protest at Prirazlomnaya oil rig, and has charged all of them with piracy, which is punishable by up to 15 years in prison.

Then, on 9 October, Russian investigators said they had found drugs aboard the ship and would press new charges against those being held. Greenpeace Russia finds the accusations absurd. "The Investigative Committee 'found' narcotics. We are waiting for it to find an atomic bomb and a striped elephant," it said on Twitter. "This is possible in Russia these days and can hardly surprise anybody."

Russia's Investigative Committee said morphine and poppy straw, a ingredient for heroin and opiates, were found on the ship and that there was also equipment that could potentially be used for military purposes on board. Greenpeace lawyer Alexander Mukhortov said that the ship's American captain legally kept morphine in his safe for medical purposes and that equipment that could have “military purposes” was merely a marine sonar used for navigation.

Russian President Vladimir Putin conceded that the activists were clearly not pirates but said that their protest did violate the law. The seriousness of the incident and subsequent detention of the activists has upset Moscow's international ties, and the Netherlands has launched legal proceedings against the Kremlin, saying that the detention of those on the Arctic Sunrise is unlawful.

Last year, Greenpeace International Director Kumi Naidoo climbed onto the same oil rig platform at Prirazlomnaya (owned by Gazprom) without repercussions. The harsher treatment by this time around is widely seen as an attempt to scare off any future protests and give a clear signal that Russia will not stand for breaches of its security or criticism of its policies.

But perhaps of greater concern for the Kremlin is Europe's threat to sue Gazprom over its pricing. On October 3, the European Union's antitrust chief, Joaquin Almunia, said the EU is preparing to charge the company with abusing its dominant position in central and eastern Europe, potentially landing Moscow with a fine of up to $15 billion.

Gazprom supplies a quarter of Europe's gas and the comments by Almunia come after a year-long investigation, part of which included raids of several Gazprom offices and those of its partners in central and eastern Europe. Almunia asserts that Gazprom may have prevented the free flow of gas across the EU and imposed unfair prices on its customers by linking the price of its gas to that of oil. Speaking at a conference in Lithuania, Almunia didn't provide details of the EU's next move. "It would be premature to anticipate when the next steps would be taken in this investigation, but we have now moved to the phase of preparing a statement of objections," he said.

However, a source told Reuters that the Commission planned to take action by the end of the year. The European Commission's bid to sue Gazprom is likely to fuel tensions between Europe and Russia – relations are already strained over the former's plans to build closer trade ties with six former Soviet republics, including Ukraine. A crucial meeting on proposed free-trade agreements between the EU and those countries will be held in the Lithuanian capital, Vilnius, this month, and Moscow has been putting the squeeze on since the summer: the Kremlin has threatened to raise the price that Ukraine pays for its gas if it signs the EU trade agreement and launched a trade war with most of the other post-Soviet nations involved (see New Nations, Russia, September). Having banned the import of Moldovan wine, Georgian mineral water and Ukrainian chocolate, Russia has now moved to suspend imports of dairy products from Lithuania.

Moscow has long been attempting to build up its own trade alliance with former Soviet republics, starting with a Customs Union between Russia, Kazakhstan and Belarus, and working towards a “Eurasian Economic Union”. It doesn't want its neighbours – particularly Ukraine, which is viewed by some Russians as part of Russia – to fall out of its orbit by signing free-trade and political association agreements with the EU. Lithuania, which joined the EU in 2004, of which it currently holds the presidency and is hosting FSU-EU trade talks this month, exported dairy products worth $193 million to Russia last year and the import ban is hitting the economy hard.

However, Russia may be losing its muscle, especially where energy dominance is concerned. On October 11, the International Energy Agency said that the United States will become the world's largest oil producer next year - overtaking Russia - thanks to its shale oil boom. The announcement came hot on the heels of an estimate by the US government that China will likely overtake it as the world's largest oil importer now that the shale gas revolution has reduced the need for the US to obtain energy from elsewhere.

The US resurgence as an oil producer is already reshuffling the cards in the game of world energy diplomacy. Major producers such as Russia are now forced to invest billions of dollars into new pipelines towards Asia as they can no longer rely on demand from the West (see New Nations, Russia, October 2013).

At home, Russia is failing to project a vision of harmony. On October 13, anti-immigration demonstrators, some chanting racist slogans, vandalised shops and other businesses known for employing migrant workers, in the southern Biryulyovo area. The incident was sparked by the killing of a young ethnic Russian, Twenty-five-year-old Yegor Shcherbakov was stabbed while walking home with his girlfriend. The murder has been widely blamed on a man from the Caucasus and locals say that the police haven't done enough to bring the perpetrator to justice. It's widely felt that the law isn't protecting “white” Russians and some of those who demonstrated chanted “white power”.

The rioting last month over a racially charged incident was the worst seen in Moscow since December 2010, when several thousand young people rioted right outside the Kremlin. Yet there are frequent outbreaks of violence in Russian cities between members of the Slavic majority and those from, or descended from, the Muslim Caucasus and Central Asia.

Russia has a demographic problem and needs migrant workers to keep its economy afloat. Putin has frequently warned of the dangers of ethnic and religious violence and he reminded the nation in September that it particularly needed migrant labourers in industries such as construction. But with the ongoing conflict in the Caucasus, and a steady stream of migrants who have no choice but to work in Russia because the opportunities don't exist at home, the problem is likely to get worse –continuing to fracture society – unless the police can be seen to be operating in a fair, professional manner.
 

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