Russia 2018

elected for the fourth time as the President of Russia. According to OSCE, the vote took place in an environment with no genuine competition, with pressure on voters and opposition candidates, and with favorable media coverage for the incumbent president. Earlier during the period under review, in September 2017, regional elections were held, with independent observers registering irregularities during campaign and on the election-day, including during vote count. Besides, there was also a misuse of state resources.

Corruption Perception Index. Russian Orthodox Church has significant influence on public opinion. Also, there are influential players in the Russian secret service and military, but they are all, ultimately, even when mutually competing for influence, rather subordinates to the president and to current regime than actors who could independently interfere into Kremlin`s decisions.

favoring the regime, citizens are generally provided with a controlled and one-sided point of view. The parliament adopted a law at the end of 2017, allowing authorities to label media outlets as “foreign agents”. Independent reporting could mostly be found online. But, that has attracted a lot of government attention recently, where after notable efforts were put to take control over Internet. A number of amendments were passed, allowing authorities to filter and block online contents, thus provoking civic protests in April 2018. * Press freedom score will be updated after data from primary source have been published. For more information see Methodology section.

Amnesty International reports on a number of violations of the right to fair trial. Detentions are too long while sentences and fines, especially in administrative courts, are decided swiftly, mainly based on police reports. In autonomous regions such as Chechnya the situation is far worse in terms of total political control over judiciary, while in occupied and annexed Crimea there is an additional legal uncertainty due to the transition from Ukrainian to Russian laws.

while it is also “endemic” in the police. There are high corruption risks in tax and customs administration. Land administration in Russia-proper is somewhat better, but in occupied and annexed Crimea corruptive land grabs are on the way. FH notes that “official anticorruption activity was nothing more than a tool of political struggle within the political and economic establishment.”

patriotism or morality can be subject to censorship and/or prosecution. Freedom of association is especially curtailed by no less than 11 laws that directly and additional 35 that indirectly limit various aspects of NGOs` work (financing, advocacy, public gathering, publishing, etc.) while the definitions of key terms are either missing or are too flexible, thus allowing authorities to endlessly discriminate. In spite of that, civil society in Russia proved as stubborn and remained an important societal factor. Public gathering is restricted, while occasional mass protests over various issues (e.g. corruption, or pension reform) are followed by mass arrests and fines. The Russian Orthodox Church (and - to a degree - also other “traditional” religious communities) enjoy privileges, to the point of endangering the secular character of the state, while small or new cults are subject to prosecution of imagined (or sometimes real) extremism. While the authorities try to push back racism, anti-immigrant violence and discrimination of non-Slav ethnic groups by ultra-right wingers in mainland Russia, discrimination of ethnic Tatars and Ukrainians in the Russia-occupied and annexed Crimea continues. Moreover, during the world football championships in June-July 2018, state officials used racist and xenophobic argumentation to discourage young Russians of establishing close contacts with foreign visitors. Public display of belonging to sexual minorities is de facto outlawed in Russia. In Chechnya, an autonomous republic within the RF, authorities went even further between spring and autumn 2017, summoning and torturing hundreds of LGBT people in an attempt to black-list as many as possible. Freedom House noted that at least 31 persons were thereby killed.

level of compensation is below expectations; this can also be done indirectly, through pressuring a company to sell its assets at sub-market price and using questionable legal proceedings. On the other hand, legal enforcement of contracts seems efficient, incurring low costs as compared to the value of the claim and is settled within a calendar year. There are specialized commercial courts, but they are often overburdened with small and simple cases. Adjournment procedures are not put in place, and courts do not use automated processes. Insolvency processes are long, lasting two years on average, and are mostly terminated via piecemeal sale, contributing to a relatively low recovery rate of slightly above 40%. The July 2017 amendments to these rules expanded the list of persons who might be held liable for debts of the bankrupt company. Registering property is not lengthy, involving few procedures and incurring low costs. However, outside major cities not all land is registered in the cadaster or mapped. Foreign ownership of land in border or other sensitive areas is restricted, while in the case of agricultural land foreign ownership is outright banned, but foreign entities (natural persons and legal entities with more than 50% of foreign ownership) could lease land for up to 49 years. Government approval through Strategic Investment Commission is necessary for investing in 45 specific areas and industries that are considered as having strategic importance; July 2017 amendments tightened control over transactions of companies registered in off-shore jurisdictions.

when previous inflation rates are taken into account. State-owned enterprises (SOE) are numerous, including more than 64 000 joint stock companies and 21 000 unitary companies. SOEs are active in many industries, not just in those that are regarded as being of strategic importance, such as public utilities, mining, energy or production of military equipment, but also those in agriculture or services. The SOEs allegedly account for 60 – 70% of GDP. Also, more than half of the banking sector is in the hands of the state-owned banks. Numerous SOEs enjoy large direct or indirect subsidies so as to maintain their operation, posing a drain on the federal budget. Although there is an ambitious privatization plan by the government, it was mostly discarded or postponed, including the minority privatization of the VTB bank. In February 2018, Russia combined its previous two independent wealth sovereign funds. Taxation system uses flat rates, with minor progressive methods in determining the level of social contributions: personal income tax is 13%, VAT 18% and corporate tax varies from 15.5% to 20% due to regional tax deductions. Social contributions consist of 30% of the gross wage, paid by the employer, leading to a labour tax wedge of 38% on the average wage, in line with the average of the OECD countries.

a modern collateral registry. Labour regulation is mostly flexible. Although fixed term contracts are prohibited for permanent tasks, their duration is limited to a long period of 60 months. Working hours face little restrictions. On the other hand, there are redundancy rules but severance pay and notice periods are not stringent and do not increase with yeas in tenure. Collective bargaining is not well organized and is mostly concentrated within the public sector. After a series of gradual hikes, the federal minimum wage was substantially increased in May 2018, but its level is still low in international comparison when average wage in the country is taken into account. A significant burden is the mandatory 12 months` military service. The system of comparing business climate on the regional level by the Agency for Strategic Initiatives led to an increased effort to improve business climate in several regions of the country. However, corruption and tax rates remain the most significant obstacles to a more business friendly environment in Russia.

other countries are also in place. However, Russia has frequently used economic sanctions as a tool in dealing with neighbouring countries, in order to promote its foreign policy goals. Such economic conflicts took place with Georgia, Moldova, and even Belarus, while recently also with the EU and Ukraine. The current trade sanctions on EU agriculture products are used to promote a substantial program of import substitution of foodstuffs. This field has also been known to have high technical barriers with sanitary standards. There are also significant product localization requirements, which give preferential treatment to locally produced goods or those with some local component; in cases of state funded projects equipment and machinery used must often be made in Russia. Recent labour regulations significantly restrict prospects for foreign migrant workers - inclusion of mandatory language and culture test, and, most importantly, very high license fees,have provedas a significant barrier to the labour market. Two thirds of Russian exports are fuels and minerals. Bad quality of transport infrastructure outside big cities and transport routes poses a significant burden on the transport of goods.