An Overview of Russia’s Economy and Politics


Russia is a continental landmass with some of the world’s most extraordinary natural resources. It spans Europe and Asia, incorporating the cultures of both in a nation more than twice as large as the United States. Russia’s immense size and geographic variety have made it a center of trade, diplomacy, and military might for centuries.

During the time of Czar Peter the Great in the eighteenth century, Russian rulers began to understand the importance of acquiring modern technology and learning from Westerners. Peter commissioned scientists and engineers and built a fleet of ships for the navy. He was also the first czar to visit foreign ports and recognize the need to expand Russia’s economic base beyond agriculture.

Although it is possible to grow some crops in northern areas of Russia, the country depends on imported grain. The long, cold winters and short growing season limit agricultural output. Consequently, the state needs large quantities of foreign currency to fund industrialization. The government has attempted to boost industry through tax exemptions, subsidized credit, and grants for research. In addition, a national savings program was initiated to promote investment.

As a result, the country became a major producer of oil and gas. The government is trying to diversify its economy, but oil and gas are still important components of the nation’s income. The nation is a major military power and an active member of the United Nations, NATO, the G8 group of powerful industrialized nations, and the International Monetary Fund.

It has also been a major supplier of weapons and military equipment to other countries. In addition, it has a large stockpile of nuclear arms. The current political structure is a federation of republics, territories, and autonomous districts. There are two federal cities (Moscow and St. Petersburg); forty-six provinces and nine territories (oblasts and krais, respectively) that function as self-governing units; twenty-one republics; four autonomous okrugs; and one autonomous oblast.

Since the collapse of the Soviet Union, Russia has shifted from a centrally-planned economy to a market-based one with privatization and liberalization of some sectors. It is a founding member of the Eurasian Economic Union and APEC.

The international community has reacted with growing concern to Russia’s actions. The United States and several European nations have banned some Russian companies from entering their markets, restricted access to the Society for Worldwide Interbank Financial Telecommunication, and placed sanctions on individuals and banks. Those measures have not deterred President Vladimir Putin, who has expanded Russian territory in Ukraine and Syria to support ally Bashar al-Assad, escalated a war against Ukraine, and threatened Western nations with nuclear strikes. Nevertheless, Putin is supported by some of the wealthiest oligarchs and businesspeople in the world. He has a majority in parliament and leads the world’s largest country by physical area. Its population is primarily ethnic Russian. In recent years, it has seen the return of migrants from former Soviet republics and other parts of the world, including the Ukraine.