Fueled by Oil Money, Russian Economy Soars

The Wall Street Journal ^ | March 13, 2007 | GUY CHAZAN

[MinorityRepublican]

BOR, Russia -- On Bor Glassworks' state-of-the-art production line here, workers in blue overalls churn out windshields for Russian-made Fords and Renaults -- and offer a glimpse of an investment boom transforming Russia's industrial landscape.

The glass company was once so poor it paid its workers with sewing machines and other tradable goods. Now, after an injection of $100 million from Belgian investors, it's a success story: Bor produces a growing share of windows for the Western cars assembled on Russian soil.

"We have a great future ahead of us," says Valery Tarbeyev, Bor's chief executive. "Some people are waiting in line up to six months for a new Ford Focus."

Across Russia, companies are spending billions of dollars to upgrade facilities and expand capacity -- all in an effort to keep pace with surging consumer demand. The activity is the latest stage of an economic turnaround that has delivered seven years of robust growth. Fueled by Russia's vast energy sector but ranging well beyond it, the boom goes a long way to explain Russia's new assertiveness on the world stage.

The revival -- dating roughly back to the 2000 election of Vladimir Putin -- is also a major reason for the president's enormous popularity. Under Mr. Putin, Russia's per-capita gross domestic product has quadrupled to nearly $7,000, and about 20 million people have been lifted out of poverty. Global corporations, such as Intel Corp. and Ford Motor Co., are fast expanding their Russian operations.

For the first time since the end of the Soviet Union, opinion polls show, more people are optimistic about the future than pessimistic. That confidence is reflected in Mr. Putin's high approval ratings, which consistently top 70%.

[Proud_USA_Republican]

Its a even worse form of faux capitalism than Chinas.

Anytime Putin and his KGB thugs get a bug up their ass or feel threatened, they can seize any business they want, and send anyone off to a prison gulag on false charges.

[MinorityRepublican]

[seppel]

I'm glad they've started to move on the oil barons. Those guys used cheap government loans which they obtained through connections or being in the communist system to buy massive government property for pennies whilst communism collapsed.

I you believe in private property, all government property should have been evaluated and returned to the private owner's offspring, as was the case in East Germany. The government could then have sold of the rest which was not claimed back by the offspring of the original owners.

[driftless2]

When you start with a Marxist economy, there is no where to go but up. I hope the Russian economic boom continues. I also hope it doesn't turn into a China-like authoritarian state sans Marxism. Putin's moves look increasingly like that type. Maybe some Russian Freepers could tell us what is going on.

[RusIvan]

they can seize any business they want, and send anyone off to a prison gulag on false charges. ==

You mean Khodorkovsky and company? I'm sure he would be sentenced to life in prison in USA for smallest of his crimes. Guy ordered hit murders but for you he is "hero" since he was against Putin. For me I wish him rotten in prison camp forever.

[Cowboy Bob]

They just opened a McDonald's in my wife's hometown. There was a 2 hour wait to buy some burgers.

[TKDietz]

"Anytime Putin and his KGB thugs get a bug up their ass or feel threatened, they can seize any business they want, and send anyone off to a prison gulag on false charges."

For what it's worth, the U.S. several years ago surpassed Russia in the number of people behind bars, both per capita and in total. We've gone way past them now. We now have the world's highest incarceration rates and more people behind bars than any other country in the world. The death penalty doesn't have anything to do with this either. Russia has had a moratorium on the death penalty for over ten years.

[Proud_USA_Republican]

Russia has had a moratorium on the death penalty for over ten years.

Correct. You just end up accidentally falling down 5 stories or poisoned with nuclear waste instead.

[mysterio]

Yet another reason to ditch oil. It's the most important part of any war on terror.