May 11th 2007
Russia's transition from a planned economy to the wild capitalism of the 1990s saw wealth concentrated in the hands of a small group of oligarchs. But the government's dismemberment of Yukos, a Russian oil company, beginning in 2003, was a turning-point towards an authoritarian, corporatist state. Although America and the European Union designated Russia a market economy in 2002, dirigisme continues to play a big role.
High oil prices helped Russia recover from the economy's systemic collapse in 1998, but a glut of oil revenues has also allowed Vladimir Putin, Russia's president, to forgo necessary reforms. Infrastructure needs investment, the financial system needs reform and foreign companies face cumbersome ground rules. Yet the economy has grown strongly for eight years, and increased by just under 7% in 2006.