The Russia Balance Sheet

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The Russia Balance Sheet
By Anders Aslund and Andrew C. Kuchins
Peterson Institute for International Economics and the Center for Strategic and International Studies, 2009
207 pp. $24.95
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Modeled on an earlier collaboration on China between the Peterson Institute for International Economics and the Center for Strategic and International Studies, this book provides an up-to-date overview of Russia's economic policy and political direction under the country's former president, Vladimir Putin, who is now prime minister. It is a fruitful collaboration between an economist and a political scientist -- not always easy -- that produces a fine synthesis. The authors argue that during the first decade of this century, the fundamentally poor condition of Russia's economy was concealed by growing oil and gas exports, which by 2007 accounted for over 60 percent of the country's export revenues and half of the government's revenues. This windfall permitted a significant increase in incomes after the decline of the late 1990s, greater military spending, and a more aggressive foreign policy -- changes generally popular with the Russian public. Russians accepted Putin's gradual suppression of liberties and reassertion of the Kremlin's authority in return for increased prosperity and a more nationalist stance in international affairs. The authors observe that how pro-Western Russia's foreign policy is is inversely related to the price of oil, and they suggest that the recent decline in the price of oil may lead to a more accommodative Moscow.