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Putin锟絪 presidency marks a period of relative political stability
that has no doubt contributed to the strong economic progress since
the crisis. The oft-recited wisdom that economic well-being requires
a strong and credible government has never been as forcefully
demonstrated as in Russia during the past few years. Russia锟絪
economic rebound under Putin has been both faster and stronger than
anyone could have predicted in the wake of the 1998 banking crisis.
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The
gross domestic product rose 5.4, 9, 5, 4.3, 6.6, and 7.3 percent
over the 1999, 2000, 2001, 2002, and 2003 periods, respectively.
Russia锟絪 industrial production grew by 11, 11.9, 4.9, 3.7, 6.7, and
7 percent over the same time. After several years of solid growth
the Russian economy is at new heights, international reserves are at
record levels, foreign debt is being repaid early, and Russia is
again able to tap international financial markets, if it wishes to
do so. Expectations are once more on the rise and the Russia equity
market is again a top performer in the world.
True, much of this recovery has been due to the oil price rise and
the collapse in imports from August 1998. But the rapid rise in
revenues from exports of oil and gas cannot alone explain the
rapidity with which the Russian economy had turned around from its
earlier years of shrinkage to an unmistakable tendency to growth.
The recovery had deeper economic reasons and meant that Russia was
at last beginning to reap some return from the substantial
structural reforms it had actually undertaken. Best enterprises in
various industries dashed ahead, stimulating significant growth not
only in oil and gas extraction but also in industries involved in
intermediary goods production and manufacturing, including
chemicals, light manufacturing, pulp and paper, and machine
building.
All these
changes should give greater prominence to a new group of Russian
entrepreneurs and small business owners, as well as magnates. They
are mainly manufacturers who are interested in production for the
market rather than sheer redistribution of the former Soviet state
assets. They are getting weary of the leaden bureaucracy,
corruption, illegality, and even violence that pervade Russia锟絪
business practices, and they rally to Putin锟絪 flag of restoring
order to the anarchic business sector. They are interested in a
transparent legal system and a sound banking system and will demand
these reforms as Russia moves to the next stage of growth. In short,
they are Putin锟絪 natural allies in his efforts to transform Russia锟絪
murky business environment and put the economy on a sustainable
growth path.
