Russia inherited from the Soviet Union a commodity-releasing and technologically backward industry that could not compete on the world market. This led to a sharp fall in production of a total of 45 percent between 1990 and 1998. In practice, many large factories stood still for years, while the equipment became increasingly obsolete.
Around 2000, the trend reversed. In the following years, industrial production increased by an average of 8 percent per year. Above all, the raw materials, energy and metal industries were strengthened. In step with increasing investments, certain industries were modernized which could also increase their exports. Several large Russian companies, including Rusal and Norilsk nickel, also established themselves abroad.
During the 2000s, the Russian government had an ambition to invest more in research and high technology to diversify the economy and reduce the dominance of the oil and gas industry. A Russian “Silicon Valley” has been created in the scientific city of Skolkovo outside Moscow and the IT industry is growing, but the development is slow.
From 2007, a large number of state-owned industrial companies were formed in the technology sector, including defense and aerospace and ship technology. At the same time, a law was introduced that restricted foreign companies’ investments in so-called strategic industries.
- COUNTRYAAH: List of top trading partners of Russia. Includes countries that imported most shipments from and exported most goods to the country.
Manufacturing of consumer goods had low priority in Soviet times. When the borders were opened for import, domestic companies found it difficult to assert themselves. When the value of the ruble was written down in 1998, imports became more expensive, which boosted Russian production for the domestic market, including the manufacture of cars and food. But when the ruble rose again in value and consumers got better economy, the imported goods took back some of their lost market shares.
The military industry was hit hard by the big production race in the 1990s, but by the end of the decade, the state’s orders for military equipment began to rise again, while exports accelerated. During the early 2000s, Russia had regained its old Soviet position as one of the world’s leading arms exporters.
Russia’s exports are still dominated by oil, natural gas and other commodities, making the country vulnerable to sudden price falls in commodity markets. Oil, oil products, natural gas and coal account for about half of the country’s export revenue, while the share of “machinery and equipment” has fallen sharply. Arms exports have increased during the first years of the 2000s, following the sharp decline in the 1990s. Russian-made weapons are sold to China and India, among others.
The most important import goods consist of machinery, vehicles and food. The most important trading partners are Germany, USA, UK, Italy and China. The most important trading partners in the CIS are Ukraine, Belarus and Kazakhstan. With the EU, Russia has a partnership and cooperation agreement, whose trade section entered into force in 1995. The result is that a number of restrictions on Russian exports to the EU have been lifted. As a result of the EU’s enlargement to 27 member states, trade with the EU has become even more important and now accounts for more than half of Russian foreign trade.
In early July 2010, Russia also entered into a customs union with Belarus and Kazakhstan. The idea was to harmonize tariffs between countries in the Union to be phased out at a later stage. In the longer term, the aim was to allow free movement across the borders of labor and capital and to introduce a single currency.
After eighteen years of negotiations, Russia was welcomed in December 2011 as a member of the WTO. The membership entered into force in the summer of 2012 after it was approved by the Russian Duma. Through WTO membership, Russia opened up for increased trade with the outside world and came to enjoy trade facilitation in a number of areas. In addition, Russia pledged not to apply customs and export taxes above certain levels and undertook not to discriminate against foreign products and operators.
FACTS – FOREIGN TRADE
US $ 443 130 million (2018)
US $ 248,701 M (2018)
US $ 113,455 million (2018)
Commodity trade’s share of GDP
42 percent (2018)
Main export goods
oil, petroleum products, natural gas, timber, wood products, metals, chemicals, weapons
Largest trading partner
Germany, USA, UK, Italy, China, Ukraine, Belarus, Kazakhstan
President Putin signs a law that allows authorities to close websites within 24 hours and without court orders that disseminate calls for riots, participation in illegal meetings or other “extremist” activities. The decree will then be used to shut down thousands of websites.
Amnesty for twenty thousand prisoners
Putin issues an amnesty for twenty thousand prisoners, including the two imprisoned members of Pussy Riot, 30 Greenpeace activists arrested in September 2013, and former oligarch Michail Chodorkovsky.
Financial support to Ukraine
Russia promises financial support to Ukraine, shaken by demonstrations following the government’s refusal to enter into an association and cooperation agreement with the EU. Russia cuts gas prices by about 30 percent and buys Ukrainian government bonds for $ 15 billion. The countries also sign a number of agreements on industrial and economic cooperation. The settlement is criticized by the opposition in Ukraine, which believes it is a Russian bribe to make the Ukrainian government refrain from concluding the agreement with the EU.
Terrorist acts in Volgograd kill 34 people
A total of 34 people were killed in two bombing days in a row in the city of Volgograd (formerly Stalingrad) in southern Russia. The suspicions fall on militant Islamists from the Caucasus. In the days following the bombing, more than 700 people are arrested in search of more terrorists and thousands of police officers carry out personal checks at various locations in the city.
Putin takes back information about Iskander missiles
The Russian Ministry of Foreign Affairs confirms media information about Iskandermissiles in the border area to the Baltics and Kaliningrad. Russia has long threatened to place these weapons here unless the US discontinues its missile defense plans based in Poland and the Czech Republic. The task creates criticism in the United States and a few days later Putin announces that the deployment decision has not yet been made.
Relations with Belarus thawed
The frosty relations with Belarus are thawed after the Belarusian government agreed that the chief executive of Uralkali, who was arrested and charged with abuse of power, should be transferred to Russia and brought to justice in his home country.
Another prosecution against Navalnyj
A new prosecution is filed against Aleksey Navalnyj. This time he is accused of co-mingling with his brother millions of rubles for a branch of the French cosmetics company Yves Rocher and from a Russian company. Navalnyj dismisses the indictment as “nonsense”.
Tens of thousands in protest against Putin
Nearly ten thousand people are demonstrating in Moscow against President Putin’s regime and demanding the release of political prisoners.
Stop importing from Lithuania
Russia stops all imports of dairy products from Lithuania. According to analysts, the decision is a revenge against Lithuania supporting countries in Eastern Europe that, against Russia’s will, are approaching the EU. Russia claims that the cessation is because Lithuania’s control of production is too poor. The EU Health Commission says it has full confidence in the products.
Navalnyj’s punishment mitigated
The court hearing the appeal against the corruption conviction against Aleksey Navalnyj (see July) maintains that Navalnyj is guilty but converts the five-year prison sentence to conditional sentence. Navalnyj continues to claim that the prosecution against him is politically motivated and says he will also appeal against the conditional sentence that risks preventing him from running in the next presidential election 2018.
Greenpeace in prosecution after campaign against Russian oil rig
Thirty activists from the environmental organization Greenpeace are charged with piracy following a protest action against a Russian oil rig in the sea north of Russia. Piracy can give between 10 and 15 years in prison, but the event is later classified as hooliganism, which can result in 7 years in prison.
Suicide bombers kill two in Dagestan
Two people are killed and six injured when a suicide bomber triggers a car bomb in the Republic of Dagestan.
Navalnyj claims cheating in mayoral election
Opposition leader Navalnyj makes a better choice than expected in Moscow’s mayoral election but still loses against Putin-led candidate Sergei Sobjanin. Since Sobjanin gets 51.3 percent of the vote and Navalnyj 27 percent, no other round of voting is needed. Navalnyj claims that cheating has occurred and requires a second round of elections. He also submits over 900 allegations of irregularities to the Moscow city court and 36 district courts.
The conflict with Belarus is intensified
The conflict with Belarus is intensified when Belarusian prosecutors formally designate Uralkali’s largest shareholder, Russian oligarch Sulejman Kerimov, as a suspect of abuse of power. Belarus calls for Kerimov.
Diplomatic conflict with Belarus
Russia gets involved in a diplomatic conflict with Belarus after Belarusian police arrested the chief executive of the Russian company Uralkali. The arrest takes place shortly after Uralkali interrupted the cooperation with its Belarusian partner Belaruskali. According to Belarusian prosecutors, the highest directors of Uralkali have enriched themselves through illegal transactions, at a cost to Belarus of 100 million US dollars. The Russian Foreign Ministry submits a sharply worded protest to the Belarusian ambassador to Moscow. Russian oil companies are ordered to reduce their deliveries to Belarus by 25 percent.
Imam is killed in Ingushia
Ahmed Kotiev, the peace-loving head of the Ingushia Security Council, is killed.
Putin bans protests during the Olympics
President Putin issues a decree banning demonstrations and meetings in Sochi during the 2014 Winter Olympics.
American-Russian relations are strained after Snowden
Relations with the United States are strained when Russia gives temporary security asylum to US former security agent Edward Snowden. Snowden is wanted by the United States for leaked secret information about a US surveillance system (see US: Current Policy / Calendar). The event prompted US President Obama to schedule a scheduled meeting with President Putin in connection with the G20 summit in Saint Petersburg in September. Obama’s decision is criticized by Russian leaders.
Chodorovsky is given a reduced prison sentence
The Supreme Court rejects Chodorkovsky’s request that the sentence against him be set aside but shortens his sentence by two months. This meant that he would be released in August 2014. However, by pardon, he was released in December 2013.
Chodorovsky gets compensation
The European Court of Human Rights finds that the trial of the former oligarch and regime critic Michail Chodorkovsky for tax fraud in 2005 went wrong, and the Russian authorities are required to pay compensation of EUR 10,000. However, the sentence of imprisonment remains.
Navalnyj sentenced to prison
Aleksey Navalnyj is sentenced to five years in prison for corruption in the Kirov timber business case (see April 2013). He is released on bail the following day, pending the appeal. Navalnyj maintains that he is innocent and sentenced for political reasons.
Deceased Magnitsky is declared guilty
Nearly four years after his death, Sergei Magnitsky, a lawyer in Moscow, is declared guilty of tax fraud. However, no penalty is imposed. The matter has been considered politically based and has led to strained relations with the United States. (See also November 2009, September 2011, December 2012 and March 2013.)
New law gives companies amnesty
Duman adopts an amnesty law for thousands of entrepreneurs who have been detained for financial crimes on separate grounds. Disputes between companies have often routinely led to prison sentences, which are now considered to hamper the country’s economic development.
Opposition mayor arrested
Yevgeny Urlasov, the only opposition mayor in a major Russian city, Yaroslavl, is arrested by police, accused of bribery.
Homosexuality law is signed
President Putin signs a law that tightens the penalties for those who “propagate homosexuality among minors”. Anyone who propagates propaganda for “non-traditional sexual relations” to young people can be sentenced to fines up to 200,000 rubles (about SEK 35,000). The president also signs a law that prohibits the violation of people’s religious sentiments. The penalty can be fined up to just over SEK 50,000.
Golos is forbidden
The election monitoring organization Golos (cf. April 2013) is banned by the government for six months for refusing to register as a “foreign agent”.
Protesters demand release of Bolotnaja defendants
Thousands of protesters in Moscow demand that the twelve people charged with riots and violence during the Bolotnaja riots in May 2012 be released. The accused say they were provoked by police.
Putin chairman of new support organization
President Putin is elected chairman of a newly formed political support organization called the All-Russian People’s Front.
US diplomat expelled
An American diplomat is arrested and expelled for spying.
Agreement with the United States on Syria
Russia and the United States agree to jointly try to push the Syrian regime and the opposition to put a stop to the massacre in Syria.
Dialogue with China on the Kurils
Japan and Russia agree to initiate a dialogue to resolve the issue of the disputed islands of the Kuril in the sea north of Japan. The dispute is the reason why the countries never signed a formal peace agreement after the Second World War. The decision is made when Shinzo Abe visits Moscow. It is the first visit by a Japanese head of government in Moscow in ten years.
Golos falls under “Agent Act”
The election monitoring body Golos becomes the first voluntary organization to be fined for failing to comply with the “Agent Act”. Golos received a foreign award in 2012 for his work. Golos replied that the prize money was immediately returned.
Trial against Navalnyj begins
A lawsuit is launched against opposition leader Aleksey Navalnyj, who is accused of embezzling 16 million rubles from a timber company in the Kirov region in 2009. Navalnyj dismisses the prosecution as “absurd” and as a way for the authorities to try to silence him.
Duman adopts religious law
The dumbass adopts a law against blasphemy that brings about more severe penalties for those found guilty of violating religious sentiments. The crime can result in up to three years in prison or a fine of the equivalent of $ 9,700. Before it comes into force, the law must be passed by the House of Parliament, the Federation Council, and signed by President Putin.
Foreign NGOs are searched
A number of foreign NGOs (voluntary organizations) have their offices scanned by the tax authorities in accordance with the “Agent Act”. (see July 2012)
Magnitsky’s case is closed
A Moscow court gives the go-ahead to a lawsuit against Attorney Sergey Magnitsky, who died in a 2009 arrest. He is charged with tax fraud and arrested after himself accusing state officials of dishonoring the equivalent of $ 230 million through tax fraud. This is the first time a death has been investigated before a court in Russia. The suspicions that Magnitsky was killed in his cell weakened Russia’s reputation abroad and led to a prolonged conflict with the United States. The committee that investigated Magnitsky’s death in the detention states that no crime was committed and closes the case.
Dumb leaders leave after tax evasion
The leader of the Duma Ethical Affairs Committee, Vladimir Pechtin, is forced to resign after Navalnyj and his colleagues reveal that Pechtin owns a luxury property in Florida that he failed to declare.
The head of the central bank sues for capital flight
Central Bank Governor Sergei Ignatsiev says that the equivalent of $ 49 billion was illegally carried out of Russia in 2012. Capital flight is equivalent to 2.5 percent of the country’s GDP and is largely controlled by Ignatsiev, largely by a well-organized criminal group. The head of the Russian counterpart to the National Criminal Police proposes that a special fiscal policy be built up to fight illegal capital flight.
Putin dismisses Dagestan’s president
Putin dismisses Dagestan President Magomedsalam Magomedov with alleged motives for failing to quell the Islamist uprising in the republic. Magomedov is being replaced so far by Ramzan Abdulatipov from Putin’s support party United Russia.
Russian soldiers kill Chechen rebel leaders
Russian soldiers are said to have killed two Chechen rebel leaders in the Vedeno district of Chechnya. The killed girls, two brothers Gakayev, were accused, among other things, of being involved in murder attempts on Chechnya’s Moscow-backed President Ramzan Kadyrov.