MOSCOW - Russia, reviled as a
bankrupt pariah state just three years ago, enters 2002 as one of the few
countries showing good economic growth and a rising stock market and with
new, closer relations with the West.
After 10 years of economic and political chaos unleashed by the collapse of
communism in 1991, many commentators say the country seems to be finally
getting it right.
It is not just the economy and reforms which have earned praise, but also
President Vladimir Putin's pro-western policy, particularly his energetic support
of the U.S. campaign in Afghanistan.
Putin is a pragmatic leader, intent on easing tensions by cooperating with Cold
War foe the United States, in the hope of getting concrete benefits from the
West, commentators say.
Benefits would include accelerated entry to the global trade body, the WTO,
and help with restructuring the country's huge foreign debt if economic times
get tougher.
But Putin faces short-term economic and political challenges next year and
unease remains over Chechnya, where human rights groups say abuses
continue.
Oil, the key driver of Russia's success in the last two years, is top of the
economic list next year. A dollar fall in the price of a barrel of oil lops $1.0
billion off Russia's revenues, economists say.
A sharp fall in oil prices was one reason for the country's 1998 financial crisis,
which brought almost pariah status.
But the International Monetary Fund's representative in Moscow Poul Thomsen
was calm about Russia's prospects.
``There is of course a scenario where oil prices drop so much and the recession
in the West is so bad that there will be a need for even further adjustment of
policies and perhaps also some borrowing, but it is not on the horizon,'' he told
Reuters.
He said the country could withstand a substantial fall in oil prices and still keep
its financial house in order.
The government forecast economic growth next year of around four percent,
down from an expected 5.5 percent this year and a record 8.3 percent in 2000
but above one percent growth estimates for the United States and the joint
economies of the European Union.
LONG-TERM, RUSSIA NEEDS BILLIONS
But the bare economic facts do not give the whole picture, World Bank chief
economist for Russia Christof Ruehl said.
``One has to make a distinction between the macro figures which all indicate
that things are good...and the real financing demand, which is what you see
when you go 10 minutes out of Moscow when roads get dilapidated and trees
are growing in the factories through the roof,'' he said.
Russia, once a major power, has per capita GDP of around $2,000, compared
with $10,000 in Portugal, the poorest EU state, and more than $30,000 in the
United States.
Russia needs to ensure steady economic growth for many years to come,
something Ruehl said could only be done by broadening the economy away
from oil dependence.
Putin's economy broadening plans, which are set to continue in 2002, have
included key reforms such as a new code which allows people to buy and sell
land for the first time since the 1917 October revolution, and efforts to make
doing business easier.
Ruehl said legislation was just a first step.
``If 2001 was the year of reform then 2002 will be the year of implementation.
The real difficult part is to track what happens on the ground (with reforms),'' he
said.
Economic changes which restored investor confidence and boosted the stock
market by almost 30 percent this year, making it one of the best-performing
bourses, have come with political and diplomatic shifts.
PUTIN NEEDS BENEFITS FROM POLICY SHIFT
Firming ties with the United States will continue in 2002 despite criticism that
the government is selling out to the West, being soft on issues such as
Yugoslavia, the Anti-Ballistic Missile Treaty and NATO expansion,
commentators say.
But strengthening links with the West is expected to be balanced by further
efforts to woo China.
Putin will also need to claim concrete benefits to show Russian citizens and
policy makers he is doing the right thing.
Benefits could come from better ties with NATO and greater cooperation with
the United States and European Union to get Russia into bodies like the World
Trade Organization.
``The changes in Russian foreign policy have been so abrupt and unexpected
that the Russian political elite has had no time to reorient itself,'' military
newspaper Nezavisimaya Voyennoye Obozrenie said.
``The president will be able to prove the correctness of the new course only if
the West really moves toward Russia and Russian citizens really feel the
impact of this. If this does not happen, the present pro-Western turn could
easily be replaced with an opposite one.''
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