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Sonja Margolina on Russia's privatised state

Not even Russia's new president Dmitry Medvedev knows how much room for manoeuvre he will have politically. "Putin has created an oligarchic capitalism in which a close circle of his confidants, most of them secret service members, controls a large part of the country's finances. The state has fallen prey to special interests. ... The Kremlin has used the enormous revenues which have flown into the public treasury over the past few years to secure its own power and for personal enrichment, rather than modernising the ailing state. Its stability therefore largely depends on rising prices for raw materials. Only thanks to an increased flow of money can this combination of feudalism and secret service oligarchy be maintained. How long the good times will continue depends not least on the recession in the US and other external factors. Without functioning institutions, the corrupt system won't be equipped for leaner times."

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