Russia's Economic Performance and Policies and Their Implications for the United States

The Russian economy has grown impressively since 1999 and, by some measures, has been one of the fastest growing economies in the world. The growth has brought an improvement in the standard of living of the average Russian citizen and has brought economic stability that Russia had not experienced in at least a decade. This strong performance is a major factor in the popular support that former President (now Prime Minister) Putin enjoys� some 70%-80% of the population view him favorably. The improvement in the Russian economy is also arguably a factor in the boldness with which the Putin leadership has reasserted Russia's status as a world power, challenging the United States, Europe, the other former Soviet states in economic and national security areas. The Russian economy is highly dependent on the production and export of oil, gas, and other natural resources. Its success has largely been the result of recordbreaking world energy prices, although prudent fiscal policies have also helped to promote economic stability. However, oil dependence could prove to be a doubleedged sword. The Putin regime's failure to complete important economic reforms and its penchant for re-asserting government control over key economic sectors also loom among the possible roadblocks down the road. How Putin's successor, President Dmitriy Medvedev, will proceed is still a matter of speculation. Although its influence has been greatly diminished since the Soviet period, Russia remains a formidable force on the global stage, and its influence seems to be growing. Russia's economy is large enough to influence global economic conditions. Many European countries and former Soviet states are highly dependent on Russian natural gas. Russia is a significant player on a number of issues critical to the United States, for example, nuclear proliferation by Iran and North Korea. Russia's perceived national interests do not always match those of the United States, creating an environment for disagreement if not conflict. While U.S. exports to Russia are still relatively small, for some producers, such as poultry, energy equipment, and technology, Russia is an important market. Russia is also an important supplier of a number of raw materials that are critical to U.S. manufacturers. These links have drawn the attention of some Members of Congress. Hearings have recently been held on Russian economic performance and policies. Congress may consider in the near future whether to extend permanent normal trade relations (PNTR) status to Russia as Russia pursues accession to the World Trade Organization (WTO). This report on Russian economic conditions and policies will be updated as events warrant. Source: Congressional Research Service

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