Energy is at the heart of Russia's remarkable change of fortune over the past seven years. Emerging from a state of virtual bankruptcy in August 1998, the country now enjoys large surpluses, has inverted its debt burden with the outside world, and has racked up successive years of economic growth and low inflation. This dramatic turnaround is directly related to Russia's status as the world's largest producer of oil and natural gas—the country has benefited tremendously from soaring prices on the world market.
With this newfound economic strength, Russia has also regained a sense of sovereignty. No longer content to play second fiddle to the West or China, it is reasserting itself as a major global player and reversing the international humiliations of the 1990s. In charting an independent foreign policy course, Russia is exerting dominance over the former Soviet republics of Eurasia (its so-called "near-abroad"). And it is trying to leverage self-proclaimed status as an "energy superpower" with other oil and gas consuming nations in Europe and further afield.
This report, a study of the policies and realities of energy powerhouse Russia, is drawn from research done in 2006 by Brookings Senior Fellows Clifford Gaddy and Fiona Hill, Senior Research Assistant Igor Danchenko, and Research Analyst Dmitry Ivanov.