Last year, the government prosecuted nearly 4,000 officials for corruption. This included hundreds of senior provincial and city officials. There's still a lot of corruption, but each year there's a little less. However, economic problems have overshadowed corruption. The global recession has cut Russian exports 40 percent, and the GDP is poised to shrink by more than ten percent this year. Rising unemployment means more unrest in the streets. One bright spot in all this is the revival of agriculture. Russian exported 14 million tons of grain in the last year. Until the communists took over in the 1920s, Russia had long been a major exporter of grain. But the communist command economy screwed that up, and it took a decade after the Soviet Union dissolved in 1991, for agriculture to find its entrepreneurial feet again.
The Russian defense industry, which lost over 80 percent of its business when the Cold War ended in 1991, managed to survive, for over a decade, on export orders. Only about a third of the Soviet era defense manufacturers are still in business, and now about half of them are faced with bankruptcy because of a shortage of orders and increased competition from China. This is complicated by the fact that the Chinese competition is mainly in the form of cheaper copies of Russian weapons and equipment. Russia thought it had signed a deal to halt this plagiarism and technology theft, but the Chinese continue to sell copies of Russian stuff on the international market. The Chinese know that Russia will not go to war over this, and otherwise can do nothing. So the Chinese either ignore Russian complaints, or issue empty apologies, and continue stealing Russian secrets and reselling them.
In an effort to aid the defense industry, Russia is negotiating a new arms reduction treaty with the United States. This will mainly reduce nuclear weapons, which are very expensive to maintain and guard. Russia would rather spend its defense dollars on new tanks and radios to replace Cold War era stuff. The Russian military is still the same old post-Cold War mess. Reforms have had a hard time taking hold. Meanwhile, training levels and readiness are low. Ships rarely go to sea, pilots get a few dozen hours a year in the air, armored units rarely go out and train as they would fight. Troops rarely fire their weapons. Except in a few parachute or commando units, morale is pretty bad. Things were looking up for the past five years, as high oil prices pumped up the economy. But that's gone now, and so is the glow.
The violence continues in the Caucasus. The pro-Russian government in Chechnya has gotten religion, backing traditionalists who want to respect ancient customs (like murdering women suspected of sexual misbehavior). This undercuts support of Islamic terrorists. In neighboring Dagestan, several Islamic radical groups are setting off bombs and shooting at police. In South Ossetia, corruption has stalled reconstruction in the wake of last Augusts war with Georgia.