Background Notes:  Russia, May 2000
Released by the Office of Russian Affairs, Bureau of
European Affairs, U.S. Department of State
Official Name:  Russian Federation

PROFILE

Geography

Area:  17 million sq. km. (6.5 million sq. mi.); about 1.8
times the size of the U.S.
Cities:  Capital--Moscow (pop. 9 million).  Other
cities--St. Petersburg (5 million), Novosibirsk (1.4
million), Nizhniy Novgorod (1.3 million).
Terrain:  Broad plain with low hills west of Urals; vast
coniferous forest and tundra in Siberia; uplands and
mountains (Caucasus range) along southern borders.
Climate:  Northern continental, from subarctic to
subtropical.

People

Nationality:  Noun and adjective--Russian(s).
Population (1997 est.):  147.5 million.
Annual growth rate:  Negative.
Ethnic groups:  Russian 81%, Tatar 4%, Ukrainian 3%, other
12%.
Religion:  Russian Orthodox, Islam, Judaism, Roman
Catholicism, Protestant, Buddhist, other.
Language:  Russian (official); more than 140 other languages
and dialects.
Education (total pop.):  Literacy--98%.
Health:  Life expectancy--(1996) 58 yrs. men, 72 yrs. women.
Work force (85 million):  Production and economic
services--84%. Government--16%.

Government

Type:  Federation.
Independence:  August 24, 1991.
Constitution:  December 12, 1993.
Branches:  Executive--president, prime minister (chairman of
the government). Legislative--Federal Assembly (Federation
Council, State Duma). Judicial--Constitutional Court,
Supreme Court, Supreme Court of Arbitration, Office of
Procurator General.
Political parties:  Shifting. The 1999 elections were
contested by Conservative Movement of Russia, Russian
All-Peoples Union, Women of Russia, Stalin Bloc-For the
USSR, Yabloko, Working Russia, Peace-Labor-May, Bloc of
Nikolayev and Federov, Spiritual Heritage, Congress of
Russian Communities, Peace and Unity Party, Party for the
Protection of Women, Unity Interregional Movement, Social
Democrats, Movement in Support of the Army, Zhirinovskiy's
Bloc, For Civic Dignity, Fatherland-All Russia, Communist
Party, Russian Cause, All-Russian Political Party of the
People, Union of Right Forces, Our Home is Russia, Socialist
Party of Russia, Party of Pensioners and the Russian
Socialist Party.
Subdivisions:  21 autonomous republics and 68 autonomous
territories and regions.
Suffrage:  Universal at 18 years.

Economy (1999 est.)

GDP:  $183 billion.
Growth rate:  3.2%.
Per capita GDP (exchange rate method):  $1,241.
Natural resources:  Petroleum, natural gas, timber, furs,
precious and nonferrous metals.
Agriculture:  Grain, sugarbeets, sunflower seeds, meat,
dairy products.
Industry:  Complete range of manufactures: automobiles,
trucks, trains, agricultural equipment, advanced aircraft,
aerospace, machine and equipment products; mining and
extractive industry; medical and scientific instruments;
construction equipment.
Trade:  Exports (f.o.b.), $74 billion: petroleum and
petroleum products, natural gas, woods and wood products,
metals, chemicals. Major markets--EU, NIS, China, Japan.
Imports (c.i.f.), $41 billion: machinery and equipment,
chemicals, consumer goods, medicines, meat, sugar,
semi-finished metal products. Major partners--EU, U.S., NIS,
Japan, China. Principal U.S. exports ($1.85 billion)--meat,
machinery, tobacco. Principal U.S. imports ($5.81
billion)--aluminum, precious stones and metals, iron, and
steel.

PEOPLE

Russia's area is about 17 million sq. km. (6.5 million sq.
mi.).  It remains the largest country in the world by more
than 2.5 million sq. mi.  Its population density is about 23
persons per square mile (9 per sq. km.), making it one of
the most sparsely populated countries in the world. Its
population is predominantly urban.

Most of the roughly 150 million Russians derive from the
Eastern Slavic family of peoples, whose original homeland
was probably present-day Poland.  Russian is the official
language of Russia, and an official language in the United
Nations.  As the language of writers such as Tolstoy,
Dostoevsky, Chekov, Pushkin, and Solzhenitsyn, it has great
importance in world literature.

Russia's educational system has produced nearly 100%
literacy.  About 3 million students attend Russia's 519
institutions of higher education and 48 universities.  As a
result of great emphasis on science and technology in
education, Russian medical, mathematical, scientific, and
space and aviation research is generally of a high order.
The number of doctors in relation to the population is high
by American standards, although medical care in Russia, even
in major cities, is far below Western standards.

The Russian labor force is undergoing tremendous changes.
Although well-educated and skilled, it is largely mismatched
to the rapidly changing needs of the Russian economy.
Millions of Russian workers are underemployed.  Unemployment
is highest among women and young people.  Many Russian
workers compensate by working other part-time jobs.
Following the collapse of the Soviet Union and the economic
dislocation it engendered, the standard of living fell
dramatically, and one third of the population lives on just
over $1 a day.

Moscow is the largest city (population 9 million) and is the
capital of the Federation.  Moscow continues to be the
center of Russian Government and is increasingly important
as an economic and business center.  Its cultural tradition
is rich, and there are many museums devoted to art,
literature, music, dance, history, and science.  It has
hundreds of churches and dozens of notable cathedrals; it
has become Russia's principal magnet for foreign investment
and business presence.

St. Petersburg, established in 1703 by Peter the Great as
the capital of the Russian Empire, was called Petrograd
during World War I, and Leningrad after 1924.  In 1991, as
the result of a city referendum, it was renamed St.
Petersburg.  Under the Tsars, the city was Russia's
cultural, intellectual, commercial, financial and industrial
center.  After the capital was moved back to Moscow in 1918,
the city's political significance declined, but it remained
a cultural, scientific and military-industrial center.  The
Hermitage is one of the world's great fine arts museums.
Finally, Vladivostok, located in the Russian Far East, is
becoming an important center for trade with the Pacific Rim
countries.

HISTORY

Human experience on the territory of present-day Russia
dates back to Paleolithic times.  Greek traders conducted
extensive commerce with Scythian tribes around the shores of
the Black Sea and the Crimean region.  In the third century
B.C., Scythians were displaced by Sarmatians, who in turn
were overrun by waves of Germanic Goths.  In the third
century A.D., Asiatic Huns replaced the Goths and were in
turn conquered by Turkic Avars in the sixth century.  By the
ninth century, Eastern Slavs began to settle in what is now
Ukraine, Belarus and the Novgorod and Smolensk regions.

In 862, the political entity known as Kievan Rus was
established in what is now Ukraine and lasted until the 12th
century.  In the 10th century, Christianity became the state
religion under Vladimir, who adopted Greek Orthodox rites.
Consequently, Byzantine culture predominated, as is evident
in much of Russia's architectural, musical, and artistic
heritage.  Over the next centuries, various invaders
assaulted the Kievan state and, finally, Mongols under Batu
Khan destroyed the main population centers except for
Novgorod and Pskov and prevailed over the region until 1480.

In the post-Mongol period, Muscovy gradually became the
dominant principality and was able, through diplomacy and
conquest, to establish suzerainty over European Russia.
Ivan III (1462-1505) was able to refer to his empire as
"the Third Rome" and heir to the Byzantine
tradition, and a century later the Romanov dynasty was
established under Tsar Mikhail in 1613.

During Peter the Great's reign (1689-1725), Russia began
modernizing, and European influences spread in Russia.
Peter created Western-style military forces, subordinated
the Russian Orthodox Church hierarchy to the Tsar, reformed
the entire governmental structure, and established the
beginnings of a Western-style education system.  His
introduction of European customs generated nationalistic
resentments in society and spawned the philosophical rivalry
between "Westernizers" and nationalistic
"Slavophiles" that remains a key dynamic of
current Russian social and political thought.

Peter's expansionist policies were continued by Catherine
the Great, who established Russia as a continental power.
During her reign (1762-96), power was centralized in the
monarchy and administrative reforms concentrated great
wealth and privilege in the hands of the Russian nobility.

Napoleon failed in his attempt in 1812 to conquer Russia
after occupying Moscow; his defeat and the continental order
that emerged following the Congress of Vienna (1814-15) set
the stage for Russia and Austria-Hungary to dominate the
affairs of eastern Europe for the next century.

During the 19th century, the Russian Government sought to
suppress repeated attempts at reform from within.  Its
economy failed to compete with those of Western countries.
Russian cities were growing without an industrial base to
generate employment, although emancipation of the serfs in
1861 foreshadowed urbanization and rapid industrialization
late in the century.  At the same time, Russia expanded
across Siberia until the port of Vladivostok was opened on
the Pacific coast in 1860.  The Trans-Siberian Railroad
opened vast frontiers to development late in the century.
In the 19th century, Russian culture flourished as Russian
artists made significant contributions to world literature,
visual arts, dance, and music.

Imperial decline was evident in Russia's defeat in the
unpopular Russo-Japanese war in 1905.  Subsequent civic
disturbances forced Tsar Nicholas II to grant a constitution
and introduce limited democratic reforms.  The government
suppressed opposition and manipulated popular anger into
anti-Semitic pogroms.  Attempts at economic reform, such as
land reform, were incomplete.

1917 Revolution and the U.S.S.R.

The ruinous effects of World War I, combined with internal
pressures, sparked the March 1917 uprising, which led Tsar
Nicholas II to abdicate the throne.  A provisional
government came to power, headed by Aleksandr Kerenskiy. On
November 7, 1917, the Bolshevik Party, led by Vladimir
Lenin, seized control and established the Russian Soviet
Federated Socialist Republic.  Civil war broke out in 1918
between Lenin's "Red" army and various
"White" forces and lasted until 1920, when,
despite foreign interventions, the Bolsheviks triumphed.
After the Red army conquered Ukraine, Belorussia,
Azerbaijan, Georgia, and Armenia, a new nation was formed in
1922, the Union of Soviet Socialist Republics.

The U.S.S.R. lasted 69 years.  In the 1930s, tens of
millions of its citizens were collectivized under state
agricultural and industrial enterprises.  Millions died in
political purges, the vast penal and labor system, or in
state-created famines.  During World War II, as many as 20
million Soviet citizens died.  In 1949, the U.S.S.R.
developed its own nuclear arsenal.

First among its political figures was Lenin, leader of the
Bolshevik Party and head of the first Soviet Government, who
died in 1924.  In the late 1920s, Josif Stalin emerged as
General Secretary of the Communist Party of the Soviet Union
(CPSU) amidst intraparty rivalries; he maintained complete
control over Soviet domestic and international policy until
his death in 1953.  His successor, Nikita Khrushchev, served
as Communist Party leader until he was ousted in 1964.
Aleksey Kosygin became Chairman of the Council of Ministers,
and Leonid Brezhnev was made First Secretary of the CPSU
Central Committee in 1964, but in 1971, Brezhnev rose to
become "first among equals" in a collective
leadership.  Brezhnev died in 1982 and was succeeded by
Yuriy Andropov (1982-84), Konstantin Chernenko (1984-85),
and Mikhail Gorbachev, who resigned as Soviet President on
December 25, 1991.  On December 26, 1991, the U.S.S.R. was
formally dissolved.

The Russian Federation

After the December 1991 dissolution of the Soviet Union, the
Russian Federation became its largest successor state,
inheriting its permanent seat on the United Nations Security
Council, as well as the bulk of its foreign assets and debt.

Boris Yeltsin was elected President of Russia by popular
vote in June 1991.  By the fall of 1993, politics in Russia
reached a stalemate between President Yeltsin and the
parliament.  The parliament had succeeded in blocking,
overturning, or ignoring the President's initiatives on
drafting a new constitution, conducting new elections, and
making further progress on democratic and economic reforms.

In a dramatic speech in September 1993, President Yeltsin
dissolved the Russian parliament and called for new national
elections and a new constitution.  The standoff between the
executive branch and opponents in the legislature turned
violent in October after supporters of the parliament tried
to instigate an armed insurrection.  Yeltsin ordered the
army to respond with force to capture the parliament
building (known as the White House).

In December 1993, voters elected a new parliament and
approved a new constitution that had been drafted by the
Yeltsin government.  Yeltsin has remained the dominant
political figure, although a broad array of parties,
including ultra-nationalists, liberals, agrarians, and
communists, have substantial representation in the
parliament and compete actively in elections at all levels
of government.

In late 1994, the Russian security forces launched a brutal
operation in the Republic of Chechnya against rebels who
were intent on separation from Russia. Along with their
opponents, Russian forces committed numerous violations of
human rights.  The Russian Army used heavy weapons against
civilians.  Tens of thousands of them were killed and more
than 500,000 displaced during the course of the war.  The
protracted conflict, which received close scrutiny in the
Russian media, raised serious human rights and humanitarian
concerns abroad as well as within Russia.

After numerous unsuccessful attempts to institute a
cease-fire, in August 1996 the Russian and Chechen
authorities negotiated a settlement that resulted in a
complete withdrawal of Russian troops and the holding of
elections in January 1997.  The Organization for Security
and Cooperation in Europe (OSCE) played a major role in
facilitating the negotiation.  A peace treaty was concluded
in May 1997.  Following an August 1999 attack into Dagestan
by Chechan separatists and the September 1999 bombings of
two apartment buildings in Moscow, the federal government
launched a military campaign into Chechnya.  Russian
authorities accused the Chechan government of failing to
stop the growth of the rebels activities and failure to curb
widespread banditry and hostage taking in the republic.  By
spring 2000, federal forces claimed control over Chechan
territory, but fighting continues as rebel fighters
regularly ambush Russian forces in the region.

GOVERNMENT AND POLITICAL CONDITIONS

In the political system established by the 1993
constitution, the president wields considerable executive
power.  There is no vice president, and the legislative is
far weaker than the executive.  The president nominates the
highest state officials, including the prime minister, who
must be approved by the Duma.  The president can pass
decrees without consent from the Duma.  He also is head of
the armed forces and of the national security council.

Duma elections were on December 19, 1999 and presidential
elections March 26, 2000.  While the Communist Party won a
narrow plurality of seats in the Duma, the pro-government
party Unity and the centrist Fatherland-All Russia also won
substantial numbers of seats in the legislature.  In the
presidential election, Vladimir Putin, named Acting
President following the December 31 resignation of Boris
Yeltsin, was elected in the first round with 53% of the
vote.  Both the presidential and parliamentary elections
were judged generally free and fair by international
observers.

Russia is a federation, but the precise distribution of
powers between the central government and the regional and
local authorities is still evolving.  The Russian Federation
consists of 89 components, including two federal cities,
Moscow and St. Petersburg.  The constitution explicitly
defines the federal government's exclusive powers, but it
also describes most key regional issues as the joint
responsibility of the federal government and the Federation
components.

Judicial System

Russia's judiciary and justice system are weak.  Numerous
matters which are dealt with by administrative authority in
European countries remain subject to political influence in
Russia.  The Constitutional Court was reconvened in March
1995 following its suspension by President Yeltsin in
October 1993.  The 1993 constitution empowers the court to
arbitrate disputes between the executive and legislative
branches and between Moscow and the regional and local
governments.  The court is also authorized to rule on
violations of constitutional rights, to examine appeals from
various bodies, and to participate in impeachment
proceedings against the president.  The July 1994 Law on the
Constitutional Court prohibits the court from examining
cases on its own initiative and limits the scope of issues
the court can hear.

In the past 3 years, the Russian Government has begun to
reform the criminal justice system and judicial
institutions, including the reintroduction of jury trials in
certain criminal cases.  Despite these efforts, judges are
only beginning to assert their constitutionally mandated
independence from other branches of government.

Human Rights

Russia's human rights record remains uneven and worsened in
some areas.  Despite significant improvements in conditions
following the end of the Soviet Union, problem areas remain.
In particular, the Russian government's military policy in
Chechnya is a cause for international concern.  Government
forces have killed numerous civilians through the use of
indiscriminate force in Chechnya.  There have been credible
allegations of violations of international human rights and
humanitarian law by Russian forces.  Chechen groups also
have committed abuses.

Although the government has made progress in recognizing the
legitimacy of international human rights standards, the
institutionalization of procedures to safeguard these rights
has lagged.  Implementation of the constitutional provisions
for due process and timely trials, for example, has made
little progress.  There are indications that the law is
becoming an increasingly important tool for those seeking to
protect human rights; after a lengthy trial and eight
separate indictments, environmental whistleblower Alexander
Nikitin was acquitted of espionage charges relating to
publication of material exposing hazards posed by the
Russian Navy's aging nuclear fleet earlier this year.
Nonetheless, serious problems remain.  The judiciary is
often subject to manipulation by political authorities and
is plagued by large case backlogs and trial delays.  Lengthy
pretrial detention remains a serious problem.  There are
credible reports of beating and torturing of inmates and
detainees by law enforcement and correctional officials.
Prison conditions fall well below international standards
and, according to human rights groups, in 1996 between
10,000 and 20,000 prisoners and detainees died, most because
of overcrowding, disease, and lack of medical care.

Efforts to institutionalize official human rights bodies
have been mixed.  In 1996, human rights activist Sergey
Kovalev resigned as chairman of the Presidential Human
Rights Commission to protest the government's record,
particularly the war in Chechnya.  Parliament in 1997 passed
a law establishing a "human rights ombudsman," a position
that is provided for in Russia's constitution and is
required of members of the Council of Europe, to which
Russia was admitted in February 1996.  The Duma finally
selected Duma deputy Oleg Mironov in May 1998.  A member of
the Communist Party, Mironov resigned from both the Party
and the Duma after the vote, citing the law's stipulation
that the Ombudsman be nonpartisan.  Because of his party
affiliation, and because Mironov had no evident expertise in
the field of human rights, his appointment was widely
criticized at the time by human rights activists.
International human rights groups operate freely in Russia,
although the government has hindered the movements and
access to information of some individuals investigating the
war in Chechnya.

The Russian Constitution provides for freedom of religion
and the equality of all religions before the law as well as
the separation of church and state.  Although Jews and
Muslims continue to encounter prejudice and societal
discrimination, they have not been inhibited by the
government in the free practice of their religion.
High-ranking federal officials have condemned anti-Semitic
hate crimes, but law enforcement bodies have not effectively
prosecuted those responsible.  The influx of missionaries
over the past several years has led to pressure by groups in
Russia, specifically nationalists and the Russian Orthodox
Church, to limit the activities of these "nontraditional"
religious groups.  In response, the Duma passed a new,
restrictive, and potentially discriminatory law in October
1997.  The law is very complex, with many ambiguous and
contradictory provisions.  The law's most controversial
provisions separates religious "groups" and "organizations"
and introduce a 15-year rule, which allows groups that have
been in existence for 15 years or longer to obtain
accredited status.  Senior Russian officials have pledged to
implement the 1997 law on religion in a manner that is not
in conflict with Russia's international human rights
obligations.  Some local officials, however, have used the
law as a pretext to restrict religious liberty.

The constitution guarantees citizens the right to choose
their place of residence and to travel abroad.  Some
big-city governments, however, have restricted this right
through residential registration rules that closely resemble
the Soviet-era "propiska" regulations.  Although the rules
were touted as a notification device rather than a control
system, their implementation has produced many of the same
results as the propiska system.  The freedom to travel
abroad and emigrate is respected although restrictions may
apply to those who have had access to state secrets.
Recognizing this progress, since 1994, President Clinton has
found Russia to be in full compliance with the provisions of
the Jackson-Vanik amendment.

Principal Government Officials

President:  Vladimir Putin
Prime Minister:  Mikhail Kasyanov

(A list of other government officials is not available at
this time)

The Russian Federation maintains an embassy at 2650
Wisconsin Ave. NW, Washington, DC 20007 (tel. 202-298-5700)
and a consular section at 2641 Tunlaw Road, Washington DC
(tel. 202-939-8907/8913/8918).  Russian consulates also are
located in New York, San Francisco, and Seattle.

ECONOMY

The Russian economy has undergone tremendous stress as it
has moved from a centrally planned economy toward a free
market system.  Difficulties in implementing fiscal reforms
aimed at raising government revenues and a dependence on
short term borrowing to finance budget deficits led to a
serious financial crisis in 1998.  Lower prices for Russia's
major export earners (oil and minerals) and a loss of
investor confidence due to the Asian financial crisis
exacerbated financial problems.  The result was a rapid
decline in the value of the ruble, flight of foreign
investment, delayed payments on sovereign and private debts,
a breakdown of commercial transactions through the banking
system and the threat of runaway inflation.  However, Russia
appears to have weathered the crisis relatively well.  Real
GDP increased by the highest percentage since the fall of
the Soviet Union, the ruble stabilized, inflation was
moderate, and investment began to increase again.  Russia is
making progress in meeting its foreign debts obligations.
In 1999, with limited access to financing from international
financial institutions or bilateral sources, the GOR
serviced around half its external debt payments due, and
sought delays in servicing Soviet-era debt pending
negotiations in the Paris and London Clubs.  In early 2000
Russia negotiated a 35% write off of its commercial debt
with the London Club.  Russia's current Paris Club agreement
expires at the end of 2000.

Gross Domestic Product

Russia's GDP, estimated at $183 billion at exchange rates
current in 1999, increased by 3.2% in 1999 compared to 1998.
 The major factors behind this strong growth were the
earlier devaluation of the ruble (spurring production of
Russian products as substitutes for more expensive imports);
record high commodity prices on international markets,
particularly oil (Russia's principal export); low inflation;
and strict government budget discipline.  For 1999 the
unemployment rate was 12.6% (using International Labor
Organization methodology).  Combined unemployment and
underemployment may exceed that figure. Industrial output in
1999 was up sharply (to 8.1%) compared to 1998, aided by the
devalued ruble.

Monetary Policy

The exchange rate stabilized in 1999 -- after falling from
6.5 rubles/dollar in August 1998 to approximately 25
rubles/dollar by April 1999, one year later it had further
depreciated only to approximately 28.5 rubles/dollar.  After
some large spikes in inflation following the August 1998
economic crisis, inflation declined steadily throughout
1999, with an overall figure of 36.5 percent; inflation for
the first quarter of 2000 was an estimated 4.1 percent.
Factors dampening price increases include weak domestic
demand, a relatively stable ruble, and the absence to date
of a federal budget deficit for the Central Bank of Russia
to monetize.

Government Spending/Taxation

Fiscal policy has been very disciplined in 1999 and early
2000.  The overall budget deficit for 1999 was 1.7 percent
of GDP, with a primary surplus of 2 percent; 1999 was the
first year the federal budget was fully implemented.  The
primary surplus during the first quarter of 2000 was 3.5
percent of GDP.  The GOR estimates that it will exceed
budgeted revenue forecasts for 2000 by about 100 billion
rubles, collecting 897.2 billion rubles.  In part, the
increase in cash revenues reflects increased receipts from
large taxpayers, e.g. oil companies and natural monopolies,
as well as growing economic activity.

Law

Lack of legislation in many areas of economic activity is a
pressing issue. Taxation and business regulations are
unpredictable, and legal enforcement of private business
agreements is weak.  Government decisions affecting business
have often been arbitrary and inconsistent.  Crime has
increased costs for both local and foreign businesses.  On
the positive side, Russian businesses are increasingly
turning to the courts to resolve disputes.  The passage of
an improved bankruptcy code in January 1998 was a positive
step; the government is advocating further improvements to
this legislation.

Natural Resources

The mineral-packed Ural mountains and the vast oil, gas,
coal and timber reserves of Siberia and the Russian Far East
make Russia rich in natural resources.  However, most such
resources are located in remote and climactically
unfavorable areas that are difficult to develop and far from
Russian ports. Oil and gas exports continue to be the main
source of hard currency, but declining energy prices have
hit Russia hard.  Russia is a leading producer and exporter
of minerals, gold and all major fuels.  The Russian fishing
industry is the world's fourth-largest, behind Japan, the
U.S. and China.  Russia accounts for one-quarter of the
world's production of fresh and frozen fish and about
one-third of world output of canned fish.

Industry

Russia is one of the most industrialized of the former
Soviet republics.  However, much of its industry is
antiquated and highly inefficient. Besides its
resource-based industries, it has developed large
manufacturing capacities, notably in machinery.  Russia
inherited most of the defense industrial base of the Soviet
Union.  Efforts have been made with varying success over the
past few years to convert defense industries to civilian
use.

Agriculture

Russia comprises roughly three-quarters of the territory of
the former Soviet Union, but has relatively little area
suited for agriculture because of its arid climate and
inconsistent rainfall.  Northern areas concentrate mainly on
livestock, and the southern parts and western Siberia
produce grain. Restructuring of former state farms has been
an extremely slow process, partially due to the lack of a
land code allowing for the free sale, purchase and mortgage
of agricultural land.  Private farms and garden plots of
individuals account for over one-half of all agricultural
production.

Investment

In 1999, investment increased by 4.5 percent, the first such
growth since 1990.  The increase came in the last half of
1999, and has continued in the opening months of 2000, up
5.9 percent year-on-year in the first quarter.  Higher
retained earnings, increased cash transactions, the positive
outlook for sales and political stability have contributed
to these favorable trends.  Over the medium-to-long term,
Russian companies that do not invest to increase their
competitiveness will find it harder either to expand exports
or protect their recent domestic market gains from higher
quality imports.

Foreign direct investment rose slightly in 1999, but remains
small.  Foreign direct investment in Russia in 1999 was USD
2.9 billion, up from USD2.8 billion in 1998, but still well
below the USD6.6 billion of FDI received in 1997.

A significant drawback for investment is the banking sector,
which has neither the resources, capability, nor the trust
of the population to attract substantial savings and
intermediate them to productive investments.  While ruble
lending has doubled since the October 1998 financial crisis,
loans are still only 28 percent of total bank assets, the
same percentage as before the crisis.  The CBR has reduced
its refinancing rate three times in 2000, to 33 percent,
signaling its interest in lower lending rates.  Banks still
perceive commercial lending as risky, and some banks are
inexperienced with assessing credit risk.

Trade

The major factor contributing to Russia's significant
economic growth in 1999 was trade performance.  Exports were
up slightly to USD74.3 billion, while imports slumped by
30.5 percent to USD41.1 billion.  As a consequence, the
trade surplus ballooned to USD33.2 billion, more than double
the previous year's level.  After a weak start, both imports
and exports recovered somewhat in the second half of the
year, as the economy began to stabilize.  The effect of
higher oil prices had a major effect on export performance,
particularly in the latter half of the year.  Even though
volumes of crude oil exports (to non-CIS countries) were
down by 2.9 percent, prices jumped up 45.9 percent.  Fuels
and energy comprise 42 percent of Russian exports.  Other
exports performed better in 1999: fertilizer exports were up
16.7 percent, forestry products up 38 percent, copper up
17.6 percent, and aluminum up 10.5 percent.  On the import
side, food and consumer goods suffered especially, with food
imports dropping by 28 percent.

Most analysts predict these trade trends will continue to
some extent in 2000.  The GOR forecasts export increases of
about 4 percent and, as the ruble strengthens in real terms
and purchasing power slowly recovers, a slightly larger
recovery in imports of about 8 percent.  However, imports in
the first quarter remained flat at USD9.4 billion, compared
to USD9.5 billion in the same period in 1999.  The
devaluation of the ruble and difficulties in completing
transactions through the Russian banking system continue to
depress imports. The combination of import duties, a 20%
value-added tax and excise taxes on imported goods
(especially automobiles, alcoholic beverages, and aircraft)
and an import licensing regime for alcohol further restrain
demand for imports.  Frequent changes in customs regulations
also have created problems for foreign and domestic traders
and investors.  Exports have continued to benefit from
higher oil prices, bolstered by higher natural gas prices.
In the first quarter of 2000, exports were up USD6 billion,
driving the trade surplus to USD12.1 billion from USD6.1
billion higher than the same period last year.

FOREIGN RELATIONS

Russia has taken important steps to become a full partner in
the world's principal political groupings.  On December 27,
1991, Russia assumed the seat formerly held by the Soviet
Union in the UN Security Council.  Russia also is a member
of the Organization for Security and Cooperation in Europe
(OSCE) and the North Atlantic Cooperation Council (NACC).
It signed the NATO Partnership for Peace initiative on June
22, 1994.  On May 27, 1997, NATO and Russia signed the
NATO-Russia Founding Act, which provides the basis for an
enduring and robust partnership between the Alliance and
Russia--one that can make an important contribution to
European security architecture in the 21st century.  On June
24, 1994, Russia and the European Union (EU) signed a
partnership and cooperation agreement.

Russia has played an important role in helping mediate
international conflicts and has been particularly actively
engaged in trying to promote a peace following the conflict
in Kosovo.  Russia is a co-sponsor of the Middle East peace
process and supports UN and multilateral initiatives in the
Persian Gulf, Cambodia, Angola, the former Yugoslavia, and
Haiti.  Russia is a founding member of the Contact Group and
(since the Denver Summit in June 1997) a member of the G-8.
In November 1998, Russia joined APEC.  Russia has
contributed troops to the NATO-led stabilization force in
Bosnia and has affirmed its respect for international law
and OSCE principles.  It has accepted UN and/or OSCE
involvement in instances of regional conflict in neighboring
countries, including the dispatch of observers to Georgia,
Moldova, Tajikistan, and Nagorno-Karabakh.

DEFENSE

Since the breakup of the U.S.S.R., the Russians have
discussed rebuilding a viable, cohesive fighting force out
of the remaining parts of the former Soviet armed forces.  A
new Russian military doctrine, promulgated in November 1993,
implicitly acknowledges the contraction of the old Soviet
military into a regional military power without global
imperial ambitions.  In keeping with its emphasis on the
threat of regional conflicts, the doctrine calls for a
Russian military that is smaller, lighter, and more mobile,
with a higher degree of professionalism and with greater
rapid deployment capability.  Such a transformation has
proven difficult.

The challenge of this task has been magnified by difficult
economic conditions in Russia, which have resulted in
reduced defense spending.  This has led to training
cutbacks, wage arrears, and severe shortages of housing and
other social amenities for military personnel, with a
consequent lowering of morale, cohesion, and fighting
effectiveness.  The poor combat performance of the Russian
armed forces in the Chechen conflict in part reflects these
breakdowns.

The actual strength of the Russian armed forces probably
falls between 1.4 and 1.6 million and is scheduled to fall
to 1.2 million by the end of 1999.  Weapons production in
Russia has fallen dramatically over the past few years;
between 1988 and 1993, it fell by at least 50% for virtually
every major weapons system.  Weapons spending in 1992 was
approximately 75% less than in 1988.  Almost all of Russia's
arms production is for sales to foreign governments, and
procurement of major end items by the Russian military has
all but stopped.

About 70% of the former Soviet Union's defense industries
are located in the Russian Federation.  A large number of
state-owned defense enterprises are on the brink of collapse
as a result of cuts in weapons orders and insufficient
funding to shift to production of civilian goods, while at
the same time trying to meet payrolls.  Many defense firms
have been privatized; some have developed significant
partnerships with U.S. firms.

U.S.- RUSSIA RELATIONS

The United States remains committed to maintaining a
constructive relationship with Russia in which we seek to
expand areas of cooperation and effectively work through
differences.  The United States continues to support
Russia's political and economic transformation and its
integration into major international organizations.  These
steps, in conjunction with achievements in considerably
reducing nuclear weapons, have greatly enhanced the security
of the United States.

The intensity and frequency of contacts between President
Yeltsin and President Clinton, most recently the Moscow
Summit in August 1998, are indicative of the strong
commitment to working together on a broad range of issues.
These include European security, reducing the threat to our
countries posed by weapons of mass destruction, and economic
cooperation, especially American investment in Russia.

Economic Relations

U.S.- Russia Joint Commission on Economic and Technological
Cooperation.  Under the leadership of Vice President Gore
and the Russian Prime Minister, the U.S. and Russia are
working to advance bilateral cooperation through nine
working committees and several working groups known
collectively as the U.S.-Russian Joint Commission on
Economic and Technological Cooperation.  Committees address
issues in the fields of science and technology, business
development, space, energy policy, environmental protection,
health, defense conversion, capital markets, and
agriculture.  In addition, the commission provides a forum
for high-level discussions of priority security and economic
issues.  The commission held its 10th session in Washington
in March 1998 and an executive session in Washington in July
1999.

Trade and Investment.  In 1999, the U.S. trade deficit with
Russia was $3.96 billion, up $1.76 billion over 1998.  U.S.
merchandise exports to Russia were nearly $1.85 billion in
1999. Russia was the United States' 41st largest export
market in 1999. U.S. imports from Russia were $5.81 billion
in 1999, making Russia the 28th largest supplier of U.S.
imports.  The 1992 U.S.-Russia trade agreement provides
mutual most-favored-nation status and includes commitments
on intellectual property rights protection.  In 1992, the
two countries also signed treaties on the avoidance of
double taxation and on bilateral investment.  In 1992, the
two countries also signed treaties on the avoidance of
double taxation and on bilateral investment.  As of spring
2000, however, the Russian parliament has not ratified the
bilateral investment treaty.  It has been ratified by the
U.S. Senate.

The U.S. actively supports Russia's efforts to join the
World Trade Organization on commercially viable terms.
Russia is currently in the process of negotiating terms of
accession to the WTO.  By the end of 1999 it had completed
ten working party meetings.  It tables its initial services
market access offer in October 1999 and has conducted
negotiations on its goods market access offer.  These offers
contain Russia's proposed commitments to maximum tariff
rates and opening of its markets to foreign providers of
services.  The U.S. actively supported Russian membership in
the Asia-Pacific Economic Cooperation (APEC) forum. Russia
became a member of APEC in November 1998.

Security Cooperation

NATO/Russia Founding Act.  Russia signed the NATO
Partnership for Peace initiative in June 1994.  U.S. and
Russian troops are serving together in the Implementation
Force in Bosnia and its successor, the Stabilization Force.
Building on these steps, NATO and Russia signed the
NATO-Russia Founding Act on May 27, 1997, in Paris.  The act
defines the terms of a fundamentally new and sustained
relationship in which NATO and Russia will consult and
coordinate regularly, and where appropriate, act jointly.
Cooperation between NATO and Russia exists in scientific and
technical fields.

Agreements/Cooperation/Nuclear Arms.  The U.S. and Russia
signed a memorandum of understanding on defense cooperation
in September 1993 that institutionalized and expanded
relations between defense ministries, including establishing
a broad range of military-to-military and scientist to
scientist contacts.  The U.S. and Russia carried out a joint
peacekeeping training exercise in Totskoye, Russia, in
September 1994.  Based on the January 14, 1994, agreement
between Presidents Clinton and Yeltsin, the two nations
stopped targeting their strategic nuclear missiles at each
other as of May 30, 1994.  U.S. and Russian security
cooperation emphasizes strategic stability, nuclear safety,
dismantling nuclear weapons, preventing proliferation of
weapons of mass destruction and their delivery systems, and
enhancing military-to-military contacts.  The START I Treaty
was signed by the United States and the Soviet Union on July
31, 1991.  Five months later, the Soviet Union dissolved,
and in May 1992, Belarus, Kazakhstan, Russia and Ukraine
signed the Lisbon Protocol to the START I Treaty, making
them Parties to the START I Treaty.  Belarus, Kazakhstan and
Ukraine have also fulfilled their commitment to accede to
the Nuclear Non-Proliferation Treaty (NPT) as non-nuclear
weapon states in the shortest possible time, and to return
all nuclear weapons on their territory to Russia for
dismantlement.  The START I Treaty entered into force on
December 5, 1994.  START I requires reductions in strategic
offensive arms to 6,000 accountable warheads on each side as
of December 4, 2001.  All Parties to the Treaty have been
successful in meeting the Treaty's reduction requirements.

START II.  The START II Treaty was signed by the United
States and Russia on January 3, 1993.  START II builds on
the START I Treaty, requiring reductions in two phases to
3,000-3,500 deployed strategic nuclear warheads on each
side, a two-thirds reduction from Cold War levels.  At the
September 1994 summit, the two nations agreed to begin
removing nuclear warheads due to be scrapped under START II
immediately, once START I takes effect and the START II
Treaty is ratified by both countries, instead of taking the
9 years allowed.  At their May 1995 summit, Presidents
Clinton and Yeltsin agreed on a set of principles that would
guide further discussion in the field of demarcation between
anti-ballistic missile systems and theater missile defenses.
 They also agreed on steps to increase the transparency and
irreversibility of nuclear arms reduction and committed not
to use newly produced fissile materials or to reuse the
fissile materials removed from nuclear weapons being
eliminated and excess to national security requirements in
nuclear weapons.  Since that time, all strategic nuclear
weapons have been removed from Ukraine, Belarus, and
Kazakhstan to Russia.  Under START II, all heavy ICBMs and
MIRVed ICBMs must be eliminated from each side's deployed
forces.  In January 1996, the U.S. Senate provided its
advice and consent to ratification of the START II Treaty.

The deadline for START II reductions was extended to
December 2007 by the START II Protocol signed by the United
States and Russia on September 26, 1997.  The Protocol has
not been submitted to the U.S. Senate for ratification.  On
April 14, 2000, the Russian Duma approved the START II
Treaty and the START II Protocol, and on May 5, President
Putin signed the ratification document.  In ratifying the
START II Treaty, the Russian Duma passed a federal law
containing a number of conditions.  Among them is a
requirement that the United States ratify the START II
Protocol before the START II Treaty can enter into force.
The Duma's ratification law and the relationship between the
1997 agreements, including those related to the ABM Treaty,
and START III and changes to the ABM Treaty, will be
considered before the START II Protocol is submitted to the
Senate for approval.

In March 1997, in Helsinki, Finland, Presidents Clinton and
Yeltsin agreed that a START III agreement would include the
following basic elements, among others:

* lower aggregate levels of 2,000-2,500 strategic nuclear
warheads-- 80 percent below the Cold War peak -- for each of
the parties

* transparency measures related to strategic nuclear
warheads inventories and the destruction of strategic
nuclear warheads

* resolving issues related to the goal of making the current
START treaties of unlimited duration

* exploration of possible measures relating to nuclear
long-range sea-launched cruise missiles and tactical nuclear
systems, including confidence-building and transparency
measures.

* early deactivation of all strategic nuclear delivery
vehicles to be eliminated under START II by December 31,
2003, by removing their nuclear warheads or taking other
jointly agreed steps;

In June 1999, in Cologne, Germany, Presidents Clinton and
Yeltsin reaffirmed their readiness to conduct new
negotiations on strategic offensive arms aimed at further
reducing the level of strategic nuclear warheads on each
side, elaborating measures of transparency concerning
existing strategic nuclear warheads and their elimination,
as well as other agreed technical and organizational
measures.  Presidents Clinton and Yeltsin also agreed at
this Summit to begin discussions on START III and the ABM
Treaty.

START III.  As agreed at Cologne, the United States and
Russia began discussions on both START III and ABM issues
during the summer of 1999.  Since then extensive discussions
have been held on these matters at senior levels of both
governments.  On July 23, 1999, the President signed into
law H.R. 4, the National Missile Defense (NMD) Act of 1999.
We are continuing substantive discussions with Russia on
START III, in parallel with discussions on changes to the
ABM Treaty.  These discussions are continuing and, with
Russia's ratification of START II, are expected to
intensify.

CFE. Following ratification by Russia and the other NIS, the
Conventional Armed Forces in Europe Treaty entered into
force on November 9, 1992.  This treaty establishes
comprehensive limits on key categories of military
equipment--tanks, artillery, armored combat vehicles, combat
aircraft, and combat helicopters--and provides for the
destruction of weaponry in excess of these limits.  An
adapted CFE Treaty was adopted at the November 1999 Istanbul
Summit.  The adapted Treaty takes account of the changes in
Europe since CFE was signed.  Politically, the process of
adaptation has played a pivotal role in managing Russian
concerns and expectations regarding NATO enlargement,
through both the Madrid and Washington NATO Summits.  NATO
Allies addressed deeply-held Russian concerns by accepting
provisions in CFE which demonstrated that NATO did not
contemplate a massive eastward shift in peacetime military
potential as a result of enlargement.  But this remains a
very NATO-friendly Treaty.

Cooperative Threat Reduction (CTR). Often called Nunn-Lugar
assistance, this type of assistance is provided to Russia
(as well as Belarus, Kazakhstan and Ukraine) to aid in the
dismantling of weapons of mass destruction and to prevent
the proliferation of such weapons.  More than $730 million
has been allocated for assistance to Russia during fiscal
years 1997 and 1998 under this program, and 13 implementing
agreements have been signed.  Key projects have included
assistance in the elimination of strategic offensive arms
($184 million), design and construction of a fissile
material storage facility ($127 million), provision of
fissile material containers ($45 million), material control
and accounting and physical protection of nuclear materials
($51 million), and development of a chemical weapons
destruction facility and provision of equipment for a pilot
laboratory for the safe and secure destruction of chemical
weapons ($106 million).

Under the highly enriched uranium agreement, the U.S. is
purchasing uranium from Russian weapons for use in power
reactors.  Also, both the U.S. and Russia will cooperate to
dispose of excess military plutonium.  The U.S. also is
assisting Russia in the development of export controls,
providing emergency response equipment and training to
enhance Russia's ability to respond to accidents involving
nuclear weapons, providing increased military-to-military
contacts.

In a multilateral effort (the European Union, Japan, and
Canada also are involved), the U.S. also has provided over
$60 million to establish and support the International
Science and Technology Center (ISTC), which provides
alternative peaceful civilian employment opportunities to
scientists and engineers of the former Soviet Union involved
with weapons of mass destruction and their delivery systems.

U.S. Assistance to Russia

Cumulative U.S. Assistance Figures. Since 1992, the U.S.
Government has allocated more than $8.2 billion in grant
assistance to Russia, funding a variety of programs in four
key areas: security programs, humanitarian assistance,
economic reform and democratic reform. The U.S. Government
is also providing assistance in such areas as nuclear
reactor safety and the environment. The grant assistance
provided by the U.S. Government to date can be broken down
as follows: almost $3.3 billion in security assistance
(weapons dismantlement and nonproliferation), over $2.2
billion in humanitarian assistance, over $1.4 billion in
economic reform programs, almost $650 million in democratic
reform programs, and $615 million in cross-sectoral and
other programs.  The U.S. Government has also supported
approximately $8.9 billion in commercial financing and
insurance for Russia. Nearly 40,000 Russians have traveled
to the United States under U.S. Government-funded training
and exchange programs. The annual level of FREEDOM Support
Act-funded assistance for Russia, which declined from a peak
of $1.6 billion in FY 1994 to $95 million in FY 1997, is
about $178 million in FY 2000.  For more detailed
information on these programs, please see the FY 1999 Annual
Report to Congress on U.S. Government Assistance to and
Cooperative Activities with the New Independent States of
the Former Soviet Union, which is available on the State
Department's website at the following address:
http://www.state.gov/www/regions/nis/nis_assist_index.html

How U.S. Assistance Has Evolved. The U.S. Government's
strategy for assistance to Russia is based on the premise
that Russia's transition to democracy and free markets will
be a long-term process.  The U.S. will need to remain
engaged throughout this process, and therefore U.S.
assistance emphasizes activities that promote the
establishment of lasting ties between Russians and Americans
at all levels of society.  Over the past three years, the
U.S. assistance program has moved away from technical
assistance to the central government, although such
assistance is still provided when it is appropriate and will
help to advance reform.  An increasing proportion of U.S.
assistance is focussed at the regional and municipal level,
where programs are helping to build the infrastructure of a
market economy, remove impediments to trade and investment,
and strengthen civil society.  In general, U.S. assistance
programs in Russia are working at the grassroots level by
bolstering small business through training and enhanced
availability of credit; expanding exchanges so that more
Russian citizens can learn about America's market democracy
on a first-hand basis; and increasing the number of
partnerships between Russian and U.S. cities, universities,
hospitals, business associations, charities, and other civic
groups.  In FY 1999, humanitarian assistance accounted for
approximately 60% of U.S. assistance to Russia, in response
to the increased need for such assistance in the aftermath
of Russia's August 1998 financial crisis.  However, in FY
2000, security and nonproliferation programs represent over
two-thirds of U.S assistance to Russia.

Security programs help demilitarize facilities; eliminate
weapons of mass destruction and prevent their proliferation,
as well as the proliferation of weapons materials, delivery
systems, technology and weapons expertise; and enable
compliance with arms accords.

U.S. Government-funded humanitarian assistance consists
mainly of food assistance provided by the U.S. Department of
Agriculture (see below). The U.S. Government also transports
food, medical equipment and other humanitarian assistance
donated by U.S. private voluntary organizations (PVOs), as
well as Defense Department excess commodities.

Increasingly, U.S. Government-funded economic reform
programs are focused in Russia's regions. A limited amount
of assistance is targeted at promoting reforms at the
national level, particularly with regard to tax
administration and Russia's efforts to accede to the World
Trade Organization (WTO).

Democratic reform programs are helping Russians develop the
building blocks of a democratic society based on the rule of
law by providing support to non-governmental organizations
(NGOs), independent media the judiciary and other key
institutions. To support this long-term generational
transition, the U.S. Government is increasingly promoting
links between U.S. and Russian communities and institutions,
including universities, hospitals and professional
associations, and is establishing public-access Internet
sites throughout Russia.  The U.S. Government will also be
awarding a grant to support a curriculum development program
for the Institute of Public Administration and Social
Studies at Moscow State University.  In addition, the U.S.
Government is helping Russia combat crime and corruption
through cooperation with U.S. law enforcement agencies and
community-based groups.

Regional Initiative (RI). The RI concentrates an array of
U.S. government technical assistance, business development,
and exchange programs in a small group of progressive
Russian regions, with the goal of helping to create
successful models of economic and political development at
the regional level.  Over time, it is hoped that these
regions will achieve broad-based economic growth, attract
outside investment, and build a strong civil society, and
that they will participate in efforts to disseminate their
experience to other regions of Russia.  Three RI sites are
up and running, in Novgorod, Samara, and Khabarovsk/Sakhalin
in the Russian Far East, and a new site is currently being
established in Tomsk.

Cooperative Threat Reduction (CTR) Program

The Defense Department's (DoD) CTR or "Nunn-Lugar" Program
was initiated in FY 1992 to reduce the threat posed to the
United States by the weapons of mass destruction (WMD)
remaining on the territory of the former Soviet Union.  CTR
promotes denuclearization and demilitarization, and seeks to
prevent WMD proliferation.

Through FY 1999, DoD has notified the U.S. Congress of over
$1.6 billion in CTR assistance to Russia, of which over $1.2
billion has been obligated through FY 1999 and over $790
million disbursed.  Cooperation has evolved and strengthened
over the years in DoD's interaction with the Russian
ministries administering the CTR program, including the
Ministry of Defense (MoD), the Ministry of Atomic Energy
(MinAtom), the now-disbanded Ministry for Defense Industry
(MDI), and the Ministry of Economy (MinEcon).  In June 1999,
the U.S. and Russian Governments extended the CTR Umbrella
Agreement through 2006.

Since FY 1997, the CTR Program has focused increasingly on
Russia.  About $383 million of the $440.4 million
appropriated for CTR in FY 1999 was earmarked for Russia.
To position Russia to reduce its force structure to START II
or potential START III levels, DoD, MoD and MinEcon agreed
in December 1997 on new CTR projects to support the required
missile systems dismantlement, strategic submarine
elimination, and enhance nuclear weapons and fissile
material security. Several of these projects are underway.
In 1999, projects were being developed to help the Russians
process and package fissile material in the
post-dismantlement stage and to prevent the proliferation of
biological weapons (BW) expertise and technology.

The CTR Program is providing Russia equipment, training,
services and logistical support to expedite the elimination
of strategic offensive arms pursuant to the START Treaties.
This includes assistance with liquid rocket-fuel
disposition, SLBM launcher and associated submarine
elimination, solid rocket-motor elimination, SS-18 and
heavy-bomber dismantlement, and other projects.  This also
includes provision of equipment for emergency support in
case of an accident involving the transport or elimination
of missiles. Under the CTR Program, the U.S. is helping
Russia destroy its CW stockpile and associated
infrastructure.  Efforts have focused on designing a CW
destruction facility at Shchuchye that the U.S. Government
plans to help construct.  Construction is under way on a
Central Analytical Laboratory (CAL) that will enhance
Russia's ability to conduct chemical-agent monitoring at CW
storage and destruction sites.  The U.S. Government procured
and delivered three mobile analytical laboratories to
support Russian CW destruction projects.  U.S.
Government-funded efforts also continued to eliminate CW
infrastructure at the KhimProm Volgograd and Novocheboksarsk
chemical complexes.

Construction continues on a facility for the storage of
fissile material derived from dismantled Russian weapons at
Mayak in the Southern Urals.  DoD is providing design
assistance, construction support and equipment, and facility
equipment. The U.S. Government is also providing Russia's
Ministry of Atomic Energy (MinAtom) with containers for the
transport and storage of fissile materials from dismantled
weapons.  Production of the containers began in October
1995, and initial shipments to Russia began in December
1995.  Through FY 1999, more than 32,000 fissile material
containers have been produced and delivered.

CTR Weapons Protection Control and Accounting (WPC&A)
Program. This program is improving security of nuclear
weapons during transportation and interim storage.  The
project was started in April 1995 under two CTR implementing
agreements with Russia.  Assistance provided includes
supercontainers, railcar upgrades, emergency support
equipment, automated inventory control and management
systems, computer modeling, a personnel reliability program,
50 sets of "quick-fix" fencing and sensors for storage
sites, and the development of a Security Assessment and
Training Center to test and evaluate new security systems
for storage sites.  This project is planned to expand to
protect over 70 additional storage sites.

CTR Materials Protection, Control and Accounting Program.
Since 1993, the United States and Russia have worked
together to prevent the theft or loss of nuclear material by
improving nuclear materials protection, control, and
accounting (MPC&A).  MPC&A improvements are designed to keep
nuclear materials secured in the facilities that are
authorized to contain them, and are the first line of
defense against nuclear smuggling that could lead to nuclear
proliferation and/or nuclear terrorism.  DOE took over the
program from DOD and is seeking to enhance the security of
weapons-grade fissile materials at more than 40 sites in
Russia.

In addition, under the highly enriched uranium agreement,
the U.S. is purchasing uranium from Russian weapons for use
in power reactors.  Also, both the U.S. and Russia will
cooperate to dispose of excess military plutonium.

Export Control Assistance. Since the early 1990s, the U.S.
has provided assistance to Russia to help it develop more
effective export control systems and capabilities in order
to prevent, deter and detect the potential proliferation of
weapons of mass destruction (WMD) and associated materials.
The objective is to help Russia build export control
institutions, infrastructure and legislation to help prevent
weapons proliferation.  Initial funding from the CTR program
has been augmented by funds from the Departments of
Commerce, Energy, State and Treasury (Customs Service).  In
FY 1996, overall responsibility for export control
assistance shifted to the Department of State, which
provides policy direction and coordinates all agencies
providing export control and border security assistance,
capitalizing in particular on the unique capabilities of the
U.S. Coast Guard to support export control and border
security assistance programs. Recent State Department funded
programs with Russia include supporting the Russian Center
for Export Controls (CEC) work with the Department of
Commerce to install internal compliance programs (ICPs) in
key Russian defense and high-technology enterprises and
facilitating the adoption of a new, comprehensive export
control law and other legal/regulatory changes in Russia.
DOE export control efforts in Russia include traditional
activities such as workshops, studies and regulatory
development. DOE also initiated the Second Line of Defense
program for Russia to combat the trafficking of illicit
nuclear materials across border and control points to
strengthen its overall capability to prevent nuclear
materials, equipment and technology from getting into the
hands of would-be proliferators.  This program entails
procuring Russian-manufactured detection equipment for key
border crossings and training programs for Russian Customs
officials.

International Science and Technology Center (ISTC). In a
multilateral effort involving the European Union, Japan, and
Canada, the U.S. has provided over $100 million to the
Moscow-based ISTC for redirection activities in Russia in
addition to millions of dollars in contributions from the
EU, Canada, Norway, Japan and South Korea.  The ISTC
provides alternative peaceful civilian employment
opportunities to scientists and engineers of the former
Soviet Union involved with weapons of mass destruction and
their delivery systems. To date, the ISTC has funded more
than 500 projects involving more than 20,000 Russian
scientists.

Biotechnical Redirection Program. In FY 1999, the U.S.
Government implemented a State Department-led pilot project
aimed at increasing transparency in former Soviet biological
weapons (BW) facilities and redirecting their scientists to
civilian commercial, agricultural and public health
activities. All activity under this project is subject to
strict oversight by an interagency working group.
Facilities and government officials in countries where the
U.S. Government is pursuing redirection activities are
explicitly informed that any cooperation with countries of
proliferation concern or terrorist entities, or any behavior
inconsistent with the Biological and Toxin Weapons
Convention (BWC), would have an immediate and negative
impact on U.S. Government assistance.  The majority of U.S.
Government-funded redirection activities are taking place
under the auspices of the International Science and
Technology Center (ISTC), which has access to facilities,
provides tax-exempt assistance directly to scientists, and
can engage multilateral funding.  Agencies involved in these
efforts include the U.S. Departments of State, Energy (DOE),
Defense (DoD), Agriculture (USDA) and Health and Human
Services (HHS). Most of these activities are oriented toward
Russian institutes and scientists.  The State Department has
allocated over $22 million since FY 1998 for these
activities. DoD also has initiated a CTR program to fund
collaborative biotechnical research with former biological
weapons scientists to prevent the proliferation of
biological weapons expertise and technology, increase access
to Russian scientists, and to enhance the transparency of
their work.  CTR also is enhancing the security of Russian
biotechnical facilities through initiation in FY 1999 of a
Biological Material Protection, Control and Accountability
Program.

Implementing Agencies

U.S. Agency for International Development (USAID). USAID has
implemented the lion's share of U.S. Government-funded
technical assistance to Russia--over $1.8 billion since
1992. USAID has devoted its assistance efforts to helping
Russia develop democratic institutions and transform its
state-controlled economy to one based on market principles.
USAID has been active in the areas of privatization and
private-sector development, agriculture, energy, housing
reform, health, environmental protection, economic
restructuring, independent media, and the rule of law.

U.S. Department of State - Public Diplomacy Exchanges
(formerly the U.S. Information Agency). Approximately 27,000
Russians have traveled to the United States on USIA-funded
exchanges since 1992. Public diplomacy exchanges promote the
growth of democracy and civil society, encourage economic
reform and growth of a market economy in Russia.  USIA's
professional and academic exchanges cover such diverse
fields as journalism, public administration, local
government, business management, education, political
science, and civic education.

Library of Congress. In FY 2000, the Russian Leadership
Program will bring 1,800 Russians from throughout Russia to
the United States for short-term study tours, including up
to 150 members of the Russian Parliament for meetings with
their counterparts in the U.S. Congress.

U.S. Department of Commerce. The Special American Business
Internship Training (SABIT) Program places Russian managers
for short-term internships with U.S. companies.  To date,
over 1,000 Russians have participated in the SABIT Program.
The Commerce Department also operates the Business
Information Service for the New Independent States (BISNIS),
which provides market information, trade leads, and
partnering services to U.S. companies interested in the
Russian market.

U.S. Export-Import Bank (Eximbank). Eximbank has approved
more than $3.6 billion in loans, loan guarantees, and
insurance for transactions in Russia since 1991. Of this
total, more than $1 billion was approved under its Oil and
Gas Framework Agreement.

U.S. Overseas Private Investment Corporation (OPIC). OPIC
has provided more than $4.0 billion in loans, loan
guarantees, and political investment insurance to American
companies investing in Russia.

Trade and Development Agency (TDA). TDA has approved
approximately $55 million in funding for feasibility studies
on more than 135 investment projects.

U.S. Department of Agriculture (USDA). In FY 1999, in
response to a request by the Russian Government, USDA
provided more than 3.7 million metric tons of food valued at
more than $1 billion, including 100,000 metric tons of
nonperishable food donated through U.S. private voluntary
organizations (PVOs), 1.7 million tons of wheat on a grant
basis, and 1.55 million tons of commodities (including beef,
pork, poultry, corn, rice, wheat and soybeans) on a
concessional basis under USDA's P.L. 480, Title I Program.
USDA also donated 15,000 tons of corn and vegetable seeds to
the Russian Government for the 1999 planting season.  In FY
2000, USDA will be providing approximately $225 million in
food assistance to Russia, which will consist of
approximately 300,000 metric tons of
government-to-government commodities targeted at
institutions such as orphanages and hospitals, and
approximately 200,000 metric tons of commodities provided by
U.S. PVOs.  In addition, USDA provides training to Russian
agriculturists and agricultural faculty through its Cochran
Fellowship and Faculty Exchange Programs, with the goal of
helping to familiarize the Russian agricultural sector with
Western-style agribusiness management, marketing, and other
issues, while at the same time increasing U.S. agricultural
exports to Russia.  Since 1992, over 500 Russians have
traveled to the U.S. under these two programs.

U.S. Department of Defense (DoD). DoD implements the
majority of the U.S. Government's security-related
assistance programs through its Cooperative Threat Reduction
(CTR) Program (see above). DoD also implements the Foreign
Military Financing (FMF) and International Military
Education and Training (IMET) programs in support of the
Partnership for Peace.

U.S. Department of Energy (DOE). DOE funds and implements a
wide range of programs in the security area, including the
provision of Material Protection Control and Accounting
(MPC& A) assistance to secure and prevent proliferation of
nuclear materials and plutonium disposition assistance. DOE
is also focusing on preventing proliferation of weapons
expertise, facilitating the downsizing of Russia's nuclear
cities, and improving the safety of Russia's nuclear
reactors.

* Initiatives for Proliferation Prevention (IPP). DOE's IPP
Program provides meaningful, sustainable,
non-weapons-related work for former Soviet
weapons-of-mass-destruction (WMD) scientists, engineers and
technicians in the NIS through commercially viable market
opportunities.  IPP provides seed funds for the
identification and maturation of technology and facilitates
interactions between U.S. industry and NIS institutes for
developing industrial partnerships, joint ventures and other
mutually beneficial arrangements.  Since 1994, IPP has
funded over 440 projects involving more than 7,000 former
Soviet weapons scientists at over 170 NIS institutes. Since
establishing the IPP program, DOE has allocated over $100
million to support IPP projects in Russia.

* Nuclear Cities Initiative (NCI). NCI was established by
DOE in late FY 1998 to help Russia provide new employment
opportunities to the workers who are displaced through
downsizing of the Russian nuclear weapons complex.  DOE has
initially concentrated its efforts on three focus cities of
Sarov, Snezhinsk and Zheleznogorsk, which house the two
Russian weapons-design laboratories and a plutonium
production enterprise.  NCI is helping create the conditions
under which new jobs can be created through economic
diversification in these closed cities.  DOE has allocated
$20 million through FY 2000 for this program.

Eurasia Foundation. The Eurasia Foundation, a private,
non-profit, grant-making organization supported by the U.S.
Government and private foundations, has awarded more than
1,600 grants totaling more than $40 million to Russian
non-governmental organizations (NGOs) and U.S.-Russian NGO
partnerships since 1993. The Foundation's grants have been
targeted in three main programmatic areas: economic reform,
governmental reform and the non-profit sector, and media and
communications.  The Foundation has also implemented
targeted grant initiatives to address specific issues, such
as the rule of law and alternative dispute resolution.

Principal U.S. Embassy Officials

Ambassador--James F. Collins
Deputy Chief of Mission-- John M. Ordway
Counselor for Political Affairs-- George Krol
Counselor for Economic Affairs-- Daniel Weygandt
Counselor for Commercial Affairs--John Peters
Counselor for Consular Affairs--Laura Clerici
Counselor for Administrative Affairs-- Richard Kramer
Counselor for Public Affairs--Alexander Almasov
Counselor for Science and Technology-
Director, U.S. Agency for International Development--Janet
Ballantyne
Immigration and Naturalization Service--Anne Corsano
Department of Energy--Robin J. Copeland
National Aeronautics and Space Administration
(NASA)--Douglas Englund

The U.S. embassy in Russia is located at Bolshoy
Devyatinskiy Perenlok, Number 8, 121099 Moscow (tel.
[7](095) 728-5000; fax: [7] (095) 728-5090).

Consulates General

Consulate General, St. Petersburg (Furshtatskaya Ulitsa 15,
tel. [7] (812) 275-1701--Paul Smith, Consul General
Consulate General, Vladivostok (Mordovtseva Ulitsa 12, tel.
[7] (4232) 268-458/554--Lysbeth Rickerman, Consul General
Consulate General, Yekaterinburg, Ulitsa Gogolya 15A, tel.
[7] (3432) 60-11-43--James Bigus, Consul General.

In Moscow, the U.S. Commercial Office is located at
Novinskiy Bulvar 15 (tel. [7] (095) 255-4848/4660 or
9564255, fax: [7] (095) 230-2101).  In St. Petersburg, the
U.S. Commercial Office is located at Bolshaya Morskaya
Ulitsa 57 (tel. [7] (812) 110-6042, fax: [7] (812) 1106479).

TRAVEL AND BUSINESS INFORMATION

The U.S. Department of State's Consular Information Program
provides Travel Warnings and Consular Information Sheets.
Travel Warnings are issued when the State Department
recommends that Americans avoid travel to a certain country.
 Consular Information Sheets exist for all countries and
include information on immigration practices, currency
regulations, health conditions, areas of instability, crime
and security, political disturbances, and the addresses of
the U.S. posts in the country.  Public Announcements are
issued as a means to disseminate information quickly about
terrorist threats and other relatively short-term conditions
overseas which pose significant risks to the security of
American travelers.  Free copies of this information are
available by calling the Bureau of Consular Affairs at
202-647-5225 or via the fax-on-demand system: 202-647-3000.
Travel Warnings and Consular Information Sheets also are
available on the Consular Affairs Internet home page:
http://travel.state.gov and the Consular Affairs Bulletin
Board (CABB).  To access CABB, dial the modem number:
301-946-4400 (it will accommodate up to 33,600 bps), set
terminal communications program to N-8-1(no parity, 8 bits,
1 stop bit); and terminal emulation to VT100.  The login is
travel and the password is info.  (Note: Lower case is
required).  The CABB also carries international security
information from the Overseas Security Advisory Council and
Department's Bureau of Diplomatic Security.  Consular
Affairs Trips for Travelers publication series, which
contain information on obtaining passports and planning a
safe trip abroad, can be purchased from the Superintendent
of Documents, U.S. Government Printing Office, P.O. Box
371954, Pittsburgh, PA 15250-7954; telephone: 202-512-1800;
fax 202-512-2250. Emergency information concerning Americans
traveling abroad may be obtained from the Office of Overseas
Citizens Services at (202) 647-5225.  For after-hours
emergencies, Sundays and holidays, call 202-647-4000.
Passport Services information can be obtained by calling the
24-hour, 7-day a week automated system ($.35 per minute) or
live operators 8 a.m. to 8 p.m. (EST) Monday-Friday ($1.05
per minute).  The number is 1-900-225-5674 (TDD:
1-900-225-7778).  Major credit card users (for a flat rate
of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648).
Travelers can check the latest health information with the
U.S. Centers for Disease Control and Prevention in Atlanta,
Georgia.  A hotline at 877-FYI-TRIP (877-394-8747) and a web
site at http://www.cdc.gov/travel/index.htm give the most
recent health advisories, immunization recommendations or
requirements, and advice on food and drinking water safety
for regions and countries.  A booklet entitled Health
Information for International Travel (HHS publication number
CDC-95-8280) is available from the U.S. Government Printing
Office, Washington, DC 20402, tel. (202) 512-1800.

Information on travel conditions, visa requirements,
currency and customs regulations, legal holidays, and other
items of interest to travelers also may be obtained before
your departure from a country's embassy and/or consulates in
the U.S. (for this country, see "Principal Government
Officials" listing in this publication). U.S. citizens who
are long-term visitors or traveling in dangerous areas are
encouraged to register at the U.S. embassy upon arrival in a
country (see "Principal U.S. Embassy Officials" listing in
this publication).  This may help family members contact you
in case of an emergency. Further Electronic Information
Department of State Foreign Affairs Network. Available on
the Internet, DOSFAN provides timely, global access to
official U.S. foreign policy information.  Updated daily,
DOSFAN includes Background Notes; Dispatch, the official
magazine of U.S. foreign policy; daily press briefings;
Country Commercial Guides; directories of key officers of
foreign service posts; etc. DOSFAN's World Wide Web site is
at http://www.state.gov. U.S. Foreign Affairs on CD-ROM
(USFAC).  Published on an annual basis by the U.S.
Department of State, USFAC archives information on the
Department of State Foreign Affairs Network, and includes an
array of official foreign policy information from 1990 to
the present.  Contact the Superintendent of Documents, U.S.
Government Printing Office, P.O. Box 371954, Pittsburgh, PA
15250-7954. To order, call (202) 512-1800 or fax (202)
512-2250. National Trade Data Bank (NTDB).  Operated by the
U.S. Department of Commerce, the NTDB contains a wealth of
trade-related information.  It is available on the Internet
(www.stat-usa.gov) and on CD-ROM.  Call the NTDB Help-Line
at (202) 482-1986 for more information.

[end document]