This new approach is drastically different from the one used during the 1990s. This is seen in what the global mass media choose to highlight, in the nature of scientific and political books published all over the world and in changes in the topics of university lectures.
Yet it is perfectly clear that no one can cancel processes that began in the 1990s and have now been pushed out of the spotlight. For Russia, these are first of all the market reforms, which have been going on for the last 15 years, and their preliminary results and prospects.
The shift in global concerns from economic issues to political problems has helped Russia, which took a long time to recover after the Soviet Union's breakup, to take its place among leading powers. Not only did it join the Group of Eight industrialized countries, but it even presided over the G8 summit in St. Petersburg last summer. Russia plays an active part in discussing the most important global problems - such as anti-terrorist efforts, the Middle East conflict and the Iranian and North Korean nuclear programs - at various international forums and multilateral and bilateral meetings. Its foreign-policy image, which withered during the first years of the post-Soviet era, now corresponds to its real weight in global politics.
Yet the country's economic position and the results of the market reforms launched in the 1990s are less obvious to international public opinion than the strengthening of Russia's foreign-policy standing. This has resulted in a number of unpleasant episodes, such as the blocking of Russia's bid to join the World Trade Organization or notorious statements by some U.S. senators about the need to exclude Russia from the Group of Eight for its economic weakness and insufficiently developed market economy.
What is Russian capitalism today? Critics of Russia are, to a certain extent, right. Indeed, the share of large businesses and corporations that are 50% owned by the state is very high. This is to a large degree the legacy of the Soviet economy, where setting up similar production facilities was seen as a waste of resources. As a result, industrial giants were founded that now are the core of Russian commodities and steel holdings and have gained popularity around the world. They are Russia's largest exporters, accounting for the bulk of budget revenues and ensuring a positive balance of payments.
The expansion of Russian gas, oil and steel producers on Western markets sometimes creates the false impression in the West that the Russian economy is alive only because of these sectors. This, however, is not quite true. Russia has other businesses as well. According to the Economic Development Ministry, it has about a million registered small businesses, and almost five million individual entrepreneurs. The share of small businesses in the country's domestic product is about 12% and employs one fifth of its population. Of course, this is not much compared to France, where over 15 million people, or more than half of the French workforce, are involved in small businesses and account for over half of GDP.
Perhaps, we should remember historical differences when making these comparisons. The market economy in France, as well as in other Western countries, is more than a century old, while it came to Russia just fifteen years ago. Moreover, the path towards the market economy was accompanied by powerful shocks that were hardest on the weakest, i.e. those people who were supposed to become the backbone of the Russian economy. At first, the liberalization of prices, which was the start of the Russian market reforms in 1992, resulted in an extremely high inflation rate and devoured almost all people's pre-reform savings. Consequently, potential small and medium-sized businessmen did not have enough money to invest. Then, in 1998, adventurous loan policies, which current Finance Minister Alexei Kudrin describes as "a mistake", led to a default on the national debt. This also hit small and medium-sized businesses the hardest, as they lost their working assets when many banks collapsed.
Leaving aside the pre-revolution period and the first timid steps towards a market economy during perestroika and after it, we can say that Russia started down the path of mass capitalism and market activity only after it recovered from the 1998 financial crisis, which took it several years.
Obviously, Russia's image in the world as a market economy, as well as the prosperity of its people, their incomes and the country's prospects of economic development will largely depend on whether small and medium-sized businesses will become well-established and grow strong. The government is making major efforts, reducing taxes, facilitating registration procedures and carrying out different programs to support small and medium-sized businesses.
A really important question is whether Russia that is strong in foreign policy will be able to achieve a similarly strong economic performance. This is not about macroeconomic figures, which are now looking well (the pace of GDP growth has been above 5% annually for the last few years in a row), but about the development of the mass market environment, which will make Russia resemble more its G8 partners. Perhaps, it will not take long to find the answer to this question.
