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As second in command by law, Putin became acting president and wasted little time in pushing through several major changes After being inaugurated on May 7, Putin restructured the Russian political landscape into 85 districts of equal representation Though supposedly equal, Putin signed a law allowing him to remove the leadership of any districts at his whim, eliciting cries of authoritarianism among critics Putin would come to be
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known as a politician not afraid of change He even gave his approval to change the words of the Russian national anthem Putin s role in Russian politics coincided with a resurgence of the crisis in Chechnya Shortly after assuming the duties of prime minister, Putin sent troops to back into Chechnya in the aftermath of several bomb explosions that had been blamed on Chechen extremists His tough stance and law and order rhetoric solidi ed his popularity among the Russian people, who would elect him to the presidency by a landslide margin one year later Putin s rise to power would not have been sustained without the healing of the economy The Russian economy rebounded in dramatic fashion following the crisis of 1998, as the result of a sudden and sharp rise in world oil prices by the year 2000 The years following the crisis saw overall improvements in Russia s foreign relations, despite well-publicized clashes in Chechnya Reaching an arms agreement with the United States in 2002, and signing energy pacts with Iran and China, Russia was no longer exporting oil at a loss In 2005, Russia signed a deal with Germany to build a gas pipeline under the Baltic Sea between the two nations an unthinkable agreement just years prior The Stabilization Fund of the Russian Federation, signed on January 1, 2004, introduced precautionary measures should oil ever drop below $27 per barrel The policy, supported by Putin, has been instrumental in balancing the Russian budget and shows signs of discipline and patience in the economy A country on the verge of bankruptcy in 1998 now wields a multibillion-dollar surplus, and the ruble, which had returned from the brink of complete annihilation, even became a convertible currency in July 2006 Since 1998, Russia s GDP growth has averaged 6 percent, more than the combined averages of all the G8 nations, according to the World Bank In that same time, private industry has ourished with government encouragement Oil revenues have been managed more effectively, and a simpli ed income tax system has been introduced Foreign debt, which had accounted for almost 50 percent of Russia s GDP at the start of Putin s rst term, was reduced to 30 percent by 2005 The $33 billion in IMF loans was actually repaid ahead of schedule Foreign exchange reserves, which had been nearly exhausted in 1998, amounted to $225 billion in 2005 Millions of dollars of foreign capital began to work its way back into the economy as well Yet numbers themselves fail to convey this remarkable transformation, as statistics often change well before perception The Russian response to the collapse of 1998 may go down in history as one of the nest examples of crisis management A disaster that was predicted to last decades was overcome in a matter of months In the twenty- rst century, the country continues to baf e the Western mind as it again proves its resilience, rebounding from the collapse of communism to emerge with a period of impressive growth beginning in
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1999 The country survived defeats in part by drawing upon vast territorial and natural resources to even the odds against more advanced adversaries In the twenty- rst century, Russia s role as a leading world producer of oil and gas once again makes it a force to be reckoned with Western capital markets and producers have taken note, investing $284 billion in FDI and $12 billion in portfolio investment in Russia in 2006 Nonetheless, Russia continues to confound Western observers with an apparent paradox: economic resilience accompanied by a retreat from the recently established democratic government
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