Russia
The defeat of the Russian Empire in World War I led to the seizure of power by the Communists and the formation of the USSR. The brutal rule of Josef Stalin (1924-53) strengthened Russian dominance of the Soviet Union at a cost of tens of millions of lives. The Soviet economy and society stagnated in the following decades until General Secretary Mikhail Gorbachev (1985-91) introduced glasnost (openness) and perestroika (restructuring) in an attempt to modernize Communism, but his initiatives inadvertently released forces that by December 1991 splintered the USSR into 15 independent republics. Since then, Russia has struggled in its efforts to build a democratic political system and market economy to replace the strict social, political, and economic controls of the Communist period. A determined guerrilla conflict still plagues Russia in Chechnya.
While there are currently no known specific threats to traveling to or residing in Russia, high crime, including organized crime directed at business, as well as areas of instability in the Caucasus region and southern Russia should be noted.
Acts of terrorism, including bombings, have occurred in large Russian cities over the last several years, including several so far in 2005. Bombings have occurred at Russian government buildings, hotels, tourist sites, markets, residential complexes and on public transportation.
In 2004, several major terror attacks occurred: in February, a bomb exploded in a Moscow subway train killing over 40 people; in August explosives on two Russian domestic flights caused them to crash claiming 90 lives, the same week a bomb outside a Moscow Metro station killed another 9 people and injured dozens more.
Also in September 2004, the seizure of a school in the Russian Republic of North Ossetia by armed terrorists resulted in over 300 deaths. In 2002 about 50 Chechen guerrillas armed with guns, grenades and explosives seized a Moscow theater and took nearly 700 patrons, including 75 foreigners, hostage.
Travel to Chechnya and all areas bordering Chechnya: North Ossetia, Ingushetia, Dagestan, Stavropol, Karachayevo-Cherkessiya and Kabardino-Balkariya should be avoided. Throughout the Caucasus region, local criminal gangs have kidnapped foreigners, including Westerners for ransom.
A number of foreigners have disappeared in Chechnya and remain unaccounted for. Close contacts with the local population do not guarantee safety. In August 2002, a Dutch employee of the international medical aid group Doctors Without Borders (Médecins Sans Frontières) was abducted in southern Russia's Dagistan region. He was released in April 2004 after a ransom was reportedly paid by the Dutch government in behalf of Doctors Without Borders. The Russian Interior Minister said in April 2004 that over 600 people were kidnapped in Chechnya in 2003. Aid groups contend that the figure is much higher.
President Vladimir Vladimirovich Putin was elected to a second term as Russian president by a landslide in March 2004 with around 70% of the vote. His nearest rival, the Communist candidate, mustered 14%. Western observers voiced concern about media bias in favor of Putin during the campaign. They had been similarly critical when United Russia, the party backed by the president, won a landslide victory in parliamentary elections the previous December and liberal parties lost virtually all their seats. Not only has Putin secured a second term as president, he also has very substantial control over parliament.
Vladimir Putin started his career in the ranks of the KGB. From 1990 he worked in the St Petersburg administration, before moving to Moscow in 1996. By August 1999 he was prime minister. Putin was named acting president by his predecessor, Boris Yeltsin, who resigned on the last day of 1999. Yeltsin introduced him as the man who could "unite around himself those who will revive Great Russia". He won elections the following May having gained widespread popularity for his pledge to take a tough line against Chechen rebels. That pledge remains in force but peace remains elusive.
He has said he wants to modernize Russia and has been credited with introducing economic reforms that have balanced the budget and cut inflation. He promises to continue reforming the economy and to safeguard democracy.
In 2003, Russia’s real gross domestic product (GDP) grew by 7.3%, surpassing average growth rates in all other G8 countries, and marking the country’s fifth consecutive year of economic expansion. Russia’s economic growth over the last five years has been fueled primarily by energy exports, particularly given the boom in Russian oil production and relatively high world oil prices during this period. But this type of growth has made the Russian economy dangerously dependent on oil and natural gas exports, and especially vulnerable to fluctuations in world oil prices. Although estimates vary widely, the World Bank has suggested that the oil and gas sector may have accounted for up to 25% of GDP in 2003—while employing less than 1% of the population.
The Russian government has made decoupling economic growth from commodity exports a priority, and is attempting to restructure and liberalize its energy sector. These reforms have come at the behest of both Russian oil and natural gas producers, who are seeking to grow in a more liberalized marketplace; as well as Russia's external trading partners, who are pressuring the country to synchronize their policies with those in Western Europe and North America, particularly vis-a-vis Russia's aspiration towards the World Trade Organization (WTO). Key to these efforts will be breaking up the monopolies that control the natural gas and electricity industries.
But in the meantime, Kremlin policy makers have exhibited an inclination to advance the state's influence in the energy sector, not to reduce it. Over the past six months, the Russian Energy Ministry (now known as the Ministry of Industry and Energy) has been streamlined and empowered; taxes on oil exports have been raised significantly (effective August 1, 2004); state-owned export facilities have grown at breakneck pace while private projects have progressed more slowly or faltered and leading industry figures have come under criminal investigation at the behest of Russia's Procuracy General. While acknowledging Russia's changing regulatory environment, as well as the oil and gas sectors' important role in economic development, President Vladimir Putin said on December 23, 2003, "The fuel and energy sector, overall, is the goose that lays the golden egg. Killing the goose would be insane, stupid and unacceptable." Having secured overwhelming victories in both the December 2003 Parliamentary elections and the Presidential election in March 2004, President Putin is expected to re-organize his country's domestic energy industry in his second term, while simultaneously working towards his pledge to double the country's GDP within 10 years.
Extortion and corruption are common in the business environment. Organized criminal groups target foreign businesses in many cities and have been known to demand protection money under threat of serious violence. Many Western firms hire security services that have improved their overall security, although this is no guarantee. Small businesses are particularly vulnerable. Since the mid-1990's, expatriate business people have been attacked, kidnapped and in some cases murdered. There have been sporadic attacks on foreigners by "skinhead" groups in some Russian urban centers. Many of these attacks target university students, particularly those of Asian and African origin, but older tourists have also been targeted. Travelers are urged to exercise caution in areas frequented by "skinhead" groups and wherever large groups have gathered.
Over the past several years there have been unexplained acts of terrorism including bombings, in large Russian cities. These bombings have occurred at Russian government buildings, hotels, tourist sites, residential complexes, and on public transportation. While foreigners have not been targeted in these attacks, travelers should be alert for unusual behavior, unattended luggage in public areas, and other common indicators that something out of the ordinary is in progress.
Business people should be particularly aware of potential risks involved in any commercial activity with the Russian military-industrial complex, including research institutes, design bureaus, and production facilities or other high technology, government-related institutions. Any misunderstanding or dispute in such transactions can attract the involvement of the security services and lead to investigation or prosecution for espionage.
