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Priorities for Russia's New Administration

Despite the trappings of luxury, much of Russia's population is near-destitute. i

Despite the proliferation of fancy cars and luxury shopping areas such as this one in Moscow, much of Russia's population is near-destitute. Alexander Nemenov/AFP/Getty Images hide caption

toggle caption Alexander Nemenov/AFP/Getty Images
Despite the trappings of luxury, much of Russia's population is near-destitute.

Despite the proliferation of fancy cars and luxury shopping areas such as this one in Moscow, much of Russia's population is near-destitute.

Alexander Nemenov/AFP/Getty Images

Here are some of the most pressing problems facing the new government of Dmitri Medvedev:

Corruption. Official corruption has skyrocketed under Putin. Last year, Russia tied for 143rd place out of 179 — along with Indonesia, Gambia and Togo — in a global survey of corruption perceptions by Berlin-based Transparency International. The state runs much of the country's oil and gas industry and is swallowing ever-larger parts of other sectors of the economy. State officials now control vast amounts of money, and businessmen say bureaucrats have taken the place of organized criminals as the main impediment to market competition.

Health. Russia's population is dying out. Infant mortality rates and low life expectancies — the average Russian man lives only to the age of 58 — are prompting a demographic crisis at a time the government is cracking down on much-needed migrant labor from other countries. Rampant alcoholism and diseases such as HIV/AIDS have grown under Putin. As first deputy prime minister, Medvedev spearheaded a so-called national program to improve Russia's health care, but experts say the project has been window dressing on a Soviet-era system that's practically in ruins.

Poverty. Moscow's streets may be jammed with Mercedes, Bentleys and BMWs on their way to fancy restaurants and luxury shops with some of the highest prices in the world, but much of Russia's population is near-destitute. The population in many parts of the countryside is vanishing as people move away from areas with no jobs, while the yawning gap between the super rich and the vast majority of Russians is ballooning. Russia is awash with money from its massive energy resources, but 12 percent inflation last year is making life increasingly difficult to afford even for the tiny middle class. Prices for some food products doubled in 2007 and are expected to continue rising this year.

Infrastructure. Tens of billions of dollars of Russia's energy wealth are channeled abroad each year, but very little is being spent on rebuilding decaying Soviet-era infrastructure. Roads and housing in much of Russia are in a dreadful state. Manufacturing has never recovered from its post-communist collapse, and most of the products Russians buy are imported. But economists are especially worried about the state-owned energy industry. They say not nearly enough is being invested into developing natural gas fields and oil deposits, and that Russia may not be able to supply even its own energy needs in just a few years.

Foreign policy. Russia's relations with the West are so bad some Russia observers are talking about a new Cold War. Putin has boosted his popularity at home by opposing Western countries on almost every issue, including sanctions against Iran and independence for Kosovo. Moscow led opposition to the United States over the war in Iraq and has threatened to direct nuclear missiles against Europe if Washington builds its planned missile defense system there. Moscow also has imposed trade embargoes and cut energy supplies to pro-Western, former Soviet states Georgia and Ukraine. Russia's bloated and corrupt military may be in shambles, but Moscow believes its energy wealth entitles it to respect on the world stage — and the Kremlin has looked to the old Soviet model of obfuscation and intimidation. Experts say Russia would be far better served by integrating with the international community. One political analyst says Russia's foreign policy priority is to simply stop pretending it's a superpower.

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