By Martina Bozadzhieva, The PBN Company, Washington, DC

On September 10th President Medvedev surprised both Russian and international observers with an unexpectedly honest and critical article about Russia’s strategic challenges. Medvedev decried Russia’s “primitive raw materials economy, chronic corruption,” “inefficient economy…weak democracy,” and “negative demographic trends,” causing a flurry of comment and speculation. The fact that the article appeared in Gazeta.ru, an online news source often critical of the Russian government, only made it more unusual.

The initial reaction was one of skepticism, especially among Russians who were asking why he published such a scathing commentary now. Having been president of the country for a year and a half, critics charge that Medvedev hasn’t done anything to solve the problems he identified. A common criticism by both journalists and readers who posted comments on the Gazeta website was that Medvedev’s ambitious agenda for turning Russia into a high-tech, knowledge-based economy was impossible without true political liberalization. Very few seemed to buy Medvedev’s argument that “the more intelligent, smarter and efficient our economy is…[the more] our political system and society as a whole will also be freer, fairer and more humane.”

Many observers considered the article’s message to be yet another example of Medvedev’s tendency to speak eloquently about democracy and liberalism without doing enough to turn his words into reality. Others , however, have started to see “Go, Russia!” as a part of a larger attempt by Medvedev to separate himself politically from Prime Minister Putin. Medvedev’s statement before the Valdai forum that he might run for a second term has been interpreted as a part of an emerging pattern.

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Last week Russia’s Cabinet approved the draft 2010 budget. Prime Minister Putin promised to cut spending by government departments while also stressing social provisions, including “maternity capital.” Galina Khatiashvili, Intern, The PBN Company, Moscow, examines how the scheme to boost Russia’s population is being received.

When Russian parents have a second child, they are eligible for what is know as “maternity capital” - a benefit currently worth 312,162.50 rubles, or just under $10,000. Prime Minister Putin recently said that an estimated 300,000 families will receive 102 billion rubles next year as part of the scheme. But although it looks good at face value, its actual usefulness is limited, making it difficult for families to take advantage of the income boost.

Maternity capital can be claimed for three different purposes: to improve living conditions, to pay for education and to supplement a mother’s pension. To draw the benefit, families must justify the purpose through a complex and lengthy administrative process designed to help prevent fraud. And it can only be claimed as a credit to pay, for example, a building contractor, rather than be withdrawn as cash to use directly.

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By Roman Kolosovskiy, Intern, The PBN Company, Moscow

President Obama’s trip to Moscow was billed as a milestone in US-Russia relations - there would be none of the Bush-era soul searching, but rather a chance to find pragmatic, common ground on pressing global issues like nuclear arms and Iran. Meetings were held and hands were shaken, but what is clear now that the dust has settled is that the US president has not aroused the same level of “Obamania” behind him in Moscow as he has elsewhere in the world.

As the Russian Foreign Ministry spokesman Andrei Nesterenko said in a television interview, the summit was “groundbreaking” in that the United States and Russia “managed to stop the degradation of our relations,” which is a subtle, but key distinction from a wholesale “reset.”

Nevertheless, Presidents Obama and Medvedev had a constructive meeting. The leaders seem to have hit it off in a way that bodes well for a positive working relationship, with Medvedev telling Interfax that he “like[s] talking with Barack.” The tone of the conversation was honest and went beyond exchanging pleasantries, which shows that the two leaders, who share a strong legal background, are serious about establishing a constructive bilateral relationship.

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By Blake Marshall, Senior Vice President & Managing Director - Government Relations, The PBN Company, Washington DC

Framework Legislation Takes Shape

The Russian government recently introduced two pieces of long-awaited legislation designed to strengthen Russia’s financial markets by curbing abuses of insider information.

On April 17, the State Duma, the lower chamber of the Russian Parliament, adopted on first reading the draft bill “On Counteracting the Abuse of Insider Information and Market Manipulation” with 316 votes in favor (more than two-thirds of the 450 member Duma).  This first reading adoption follows the bill’s submission by the Russian Government at the end of the Duma’s fall session in December 2008.

If this bill ultimately passes through both chambers and is signed, it would become the first law that addresses the issue of insider information in Russia.  In preparation for nearly a decade, an earlier version of the bill was introduced by a group of Duma deputies in 2000, but was then recalled under the pretext of another pending government initiative on the subject.

On March 4, the Government also introduced into the Duma amendments to the Criminal Code that establish a maximum sentence of seven years in prison for the abuse of insider information.  The first reading of these amendments is scheduled for May 2009.

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By Adrian Erlinger, Account Manager, The PBN Company, Washington

As world leaders representing the G-20 gather in London today to hammer out a global response to the economic crisis, US President Barack Obama met Russian counterpart Dmitry Medvedev face-to-face for the first time.

While two declarations were signed — one on strategic weapons and another on general bilateral relations — major breakthroughs will be saved for the next presidential meeting, which both leaders agreed would take place in July. In the meantime, both countries will strive to further reduce weapons stockpiles through a new Strategic Arms Reduction Treaty, set to expire in December.

Noting the “drifting” and “degrading” in ties over the past few years, both Obama and Medvedev heralded the beginning of “constructive dialogue” to advance “mutual interest” in reducing nuclear weapons stockpiles, advancing nonproliferation efforts, curbing terrorism and curing the anemic global economy.

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By Adrian Erlinger, Account Manager, The PBN Company

On Monday, women were fêted with flowers as Russia celebrated International Women’s Day. On March 12, Yelena Skrynnik became the third female to join President Dmitry Medvedev’s cabinet, filling the post of Minister of Agriculture. With the economic climate negatively impacting Russia’s regions, Medvedev’s has chosen a proven manager to steer the agricultural sector through a difficult financial period.

“I know that today our situation is rendered that much more difficult by the financial crisis. It has exacerbated a number of problems that have been building up for decades in the countryside,” Medvedev said on a video broadcast on the Kremlin website.  “These involve issues concerning financing and obtaining affordable loans, the sort of problems that we have in fact been working on lately and with which we have had some success.”

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