For the time being, the political leverage (and revenue) provided by historically high oil prices and the domestic popularity of the Putin/ Medvedev regime will ensure that Russia will become increasingly self-confident. But longer-term, that may prove dangerous. It may allow Russians to ignore structural problems that matter for foreign investors.

Transparency International, a non-profit watchdog, ranked Russia 143 out of 179 countries for perceived corruption in 2007. Russian courts and judges remain among the world’s most suspect. Kremlin insiders use the tax police as a weapon for score-settling with political and business rivals. Commercially motivated murders of local businessmen are more common in Russia than in almost any other emerging market country. Russia also trails its emerging market competitors in domestic investment dollars per capita, and the lion’s share of Russian capital continues to head for the exits.

The greatest long-term threat to Russia’s emergence may come from the Putin/Medvedev partnership itself. As Medvedev grows into his new job, amasses political capital of his own and begins to pursue policies that Putin does not favour, which man will give way? Might signs of rivalry between the two men force Kremlin insiders to protect their political interests and economic assets by taking sides in hopes of betting on the winner? We won’t know for certain unless and until it happens. If it does, the consequences will surely be bad for business — and for Russia’s long-term political stability.

Ian Bremmer, president of Eurasia Group, a political risk consultancy, is the New York-based author of ‘The J Curve: A New Way to Understand Why Nations Rise and Fall’

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