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Russia Profile

Russia emerged from a decade of post-Soviet economic and political turmoil to reassert itself as a world power.

Income from vast natural resources, above all oil and gas, have helped Russia overcome the economic collapse of 1998. The state-run gas monopoly Gazprom is the world's largest producer and exporter, and supplies a growing share of Europe's needs.

Economic strength has allowed Vladimir Putin - Russia's dominant political figure since 2000 - to enhance state control over political institutions and the media, buoyed by extensive public support for his policies.

Spanning nine time zones, Russia is the largest country on earth in terms of surface area, although large tracts in the north and east are inhospitable and sparsely populated.

This vast Eurasian land mass covers more than 17m sq km, with a climate ranging from the Arctic north to the generally temperate south.

In the period of rapid privatisation in the early 1990s, the government of President Boris Yeltsin created a small but powerful group of magnates, often referred to as "oligarchs", who acquired vast interests in the energy and media sectors.

President Yeltsin's successor, Vladimir Putin, moved to reduce the political influence of oligarchs soon after taking office, forcing some into exile and prosecuting others.

Mikhail Khodorkovsky, the former head of the Yukos oil company and a supporter of the liberal opposition, is serving eight years in a Siberian penal colony on tax and fraud charges. Yukos assets were later acquired by the state oil giant Rosneft.
Russia resurgent

During Mr Putin's presidency Russia's booming economy and assertive foreign policy bolstered national pride. In particular, Russia promoted its perceived interests in former Soviet states more openly, even at the cost of antagonising the West.

The tensest moment came in August 2008, when a protracted row over two breakaway regions of Georgia escalated into a military conflict between Russia and Georgia.

Russia sent troops into Georgia and declared that it was recognising the independence of Abkhazia and South Ossetia, sparking angry reactions in the West and fears of a new Cold War.

Tensions with the US

At the same time, Moscow threatened to counter plans by the US Bush administration to develop an anti-missile system in Eastern Europe with its own missiles in Kaliningrad Region on Poland's borders. President Obama later withdrew the plan, in a move seen in Russian official circles as a vindication of the assertive foreign policy.

Another source of irritation between Russia and the US is Moscow's role in Iran's nuclear energy programme. Russia agreed in 2005 to supply fuel for Iran's Bushehr nuclear reactor and has been reluctant to support the imposition of UN sanctions on Iran.

A gradual warming in relations between Russia and the US early in 2010 culminated in the signing of a new nuclear arms treaty designed to replace the expired Strategic Arms Reduction Treaty (Start) of 1991.

Though disagreements remain between Moscow and Washington over US plans for a missile defence shield, there are signs that the thaw in relations could extend to a greater willingness on the part of Russia to apply pressure on Iran over its nuclear programme.

However, relations between the Russia and the US took another downtown in 2012, on account of Russian sensitivity to US criticism of its treatment of human rights activists and opponents of the Kremlin.
Economic muscle

Russia's economic power lies in its key natural resources - oil and gas. The energy giant Gazprom is close to the Russian state and critics say it is little more than an economic and political tool of the Kremlin.

At a time of increased concern over energy security, Moscow has more than once reminded the rest of the world of the power it wields as a major energy supplier. In 2006, it cut gas to Ukraine after a row between the countries, a move that also affected the supply of gas to Western Europe
Ethnic and religious divisions

While Russians make up more than 80% of the population and Orthodox Christianity is the main religion, there are many other ethnic and religious groups. Muslims are concentrated among the Volga Tatars and the Bashkirs and in the North Caucasus.

Separatists and latterly armed Islamists have made the Caucasus region of Chechnya a war zone for much of the post-Soviet era. Many thousands have died since Russian troops were first sent to put down a separatist rebellion in 1994.

Moscow is convinced that any loosening of its grip on Chechnya would result in the whole of the North Caucasus falling to anarchy or Islamic militancy.

Human rights groups at home and abroad have accused Russian forces in Chechnya of widespread abuses against the public. Since the 11 September attacks on the US Moscow has tried to present its campaign as part of the global war against terrorism.

In a sign of growing confidence that peace might be returning, the Russian authorities called a formal end to the military operation against the rebels in 2009. Sporadic violence continues, however, with a major suicide bomb blast in September 2010 reigniting the debate about the efficacy of the counter-terror campaign.

Economy - overview:
   
Russia has undergone significant changes since the collapse of the Soviet Union, moving from a globally-isolated, centrally-planned economy to a more market-based and globally-integrated economy. Economic reforms in the 1990s privatized most industries, with notable exceptions in the energy and defense-related sectors. The protection of property rights is still weak and the private sector remains subject to heavy state interference. In 2011, Russia became the world's leading oil producer, surpassing Saudi Arabia; Russia is the second-largest producer of natural gas; Russia holds the world's largest natural gas reserves, the second-largest coal reserves, and the eighth-largest crude oil reserves. Russia is also a top exporter of metals such as steel and primary aluminum. Russia's reliance on commodity exports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices. The government since 2007 has embarked on an ambitious program to reduce this dependency and build up the country's high technology sectors, but with few visible results so far. The economy had averaged 7% growth in the decade following the 1998 Russian financial crisis, resulting in a doubling of real disposable incomes and the emergence of a middle class. The Russian economy, however, was one of the hardest hit by the 2008-09 global economic crisis as oil prices plummeted and the foreign credits that Russian banks and firms relied on dried up. According to the World Bank the government's anti-crisis package in 2008-09 amounted to roughly 6.7% of GDP. The economic decline bottomed out in mid-2009 and the economy began to grow again in the third quarter of 2009. High oil prices buoyed Russian growth in 2011-12 and helped Russia reduce the budget deficit inherited from 2008-09. Russia has reduced unemployment to a record low and has lowered inflation below double digit rates. Russia joined the World Trade Organization in 2012, which will reduce trade barriers in Russia for foreign goods and services and help open foreign markets to Russian goods and services. At the same time, Russia has sought to cement economic ties with countries in the former Soviet space through a Customs Union with Belarus and Kazakhstan, and, in the next several years, through the creation of a new Russia-led economic bloc called the Eurasian Economic Union. Russia has had difficulty attracting foreign direct investment and has experienced large capital outflows in the past several years, leading to official programs to improve Russia's international rankings for its investment climate. Russia's adoption of a new oil-price-based fiscal rule in 2012 and a more flexible exchange rate policy have improved its ability to deal with external shocks, including volatile oil prices. Russia's long-term challenges also include a shrinking workforce, rampant corruption, and underinvestment in infrastructure.

Facts

    Full name: Russian Federation
    Population: 142.7 million (UN, 2012)
    Capital: Moscow
    Area: 17 million sq km (6.6 million sq miles)
    Major language: Russian
    Major religions: Christianity, Islam
    Life expectancy: 63 years (men), 75 years (women) (UN)
    Monetary unit: 1 rouble = 100 kopecks
    Main exports: Oil and oil products, natural gas, wood and wood products, metals, chemicals, weapons and military equipment
    GNI per capita: US $10,650 (World Bank, 2011)
    Internet domain: .ru
    International dialling code: +7

Source of data and information: www.bbc.com; www.cia.gov

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