that of the poorest 10% citizens is 1:15, far beyond the warring line of social stability, which is 1:10. More than 1/3 citizen live under the poverty line. In order to conquer the impoverishment of citizens, the government has decided to impose luxury consumption tax upon the rich and constantly enhance the lowest wage and welfare standard according to the price index. The government set up a system to redistribute money through Moscow to support poorer regions. Although net redistribution accounts for only 1 percent of GDP, it arouses considerable conflict. There are only 10 donor regions that is, regions that contribute more to the federal budget than they receive from it and they are unhappy that their payments make up more than half the federal budget. Some regions pursue policies of glocalization by establishing direct links with foreign partners, which often makes them more dependent on international markets than on decrees signed in Moscow. But one should also bear in mind that Russias real economic course is strongly influenced by businesspeople who are accustomed to lobbying, corruption, and paternalism. Influential industrial groups want the government to protect them from rival foreign investments by allowing only selected friendly companies to operate in Russia (the stance labeled hammerization after U.S. oil tycoon Armand Hmmers strategy of relying on his friendships with Kremlin leaders to make business deals in the former Soviet Union). So Putins policy must be pragmatic in responding to various challenges and vested interests. Nonetheless, it is likely, though not inevitable, that his economic policy will have a liberal bias, because the government currently controls a very small share of the national economy. Federal budget revenues in 1999 were only about 14 percent of GDP, and those of all levels of government combined were only 36 percent of GDP. Existing government financial and economic institutio...
