ANALYSIS: PUTIN'S RUSSIA: Putin Grapples with His Nation's History, but Is He Getting Anywhere? Kremlin Trying Hard but Black Economy Still Cripples Country ; the Economy Is Growing, the Government Is Gaining Control and Political Turbulence Has Gone, but Corruption and Bribery Remain Endemic

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AT A SUMMIT in Slovenia last year, President George Bush claimed, to the astonishment and titters of the press, that he had seen into Vladimir Putin's soul and liked what he saw.

Mr Bush may see into Mr Putin's soul but not many others do. To many Russians he remains a sphinx, though possibly one without a riddle. As a career KGB officer he was presumably trained to conceal his own feelings and make friends with possible informants. He would not have been the chosen candidate to replace Boris Yeltsin at the end of 1999 if he had made many enemies. The Kremlin PR experts rightly believed that Mr Putin conveyed just the right mixture of macho efficiency and patriotic zeal to appeal to the Russian public.

He still does. Despite the sinking of the nuclear-powered submarine Kursk in 2000 and the continuing war in Chechnya two out of three Russians say they approve of Mr Putin. His support is wide, rather than deep. He has benefited from the political and economic tranquility of the last three years, in contrast with the turbulent era of President Yeltsin. With a tame Duma at his beck and call, there is no effective opposition or presidential rival.

Russia has finally achieved a degree of political stability and is gradually emerging from the economic black hole into which it fell after the collapse of Communism. Many of its problems are intractable: long periods of lack of investment in industry; the decline in a once-proud education system; and the decay of infrastructure. Most companies depend on domestic protectionism to survive.

The Russian political and economic elite is wholly self-serving. For instance, it has almost wholly ignored the explosion in HIV- Aids infection in the population, leading one expert to argue that there is no chance of anything being done "until the children of the elite start dying from Aids".

The appearance of increasing autocratic control can be deceptive. Russians, drawing on centuries of experience of autocracy, are expert at bowing their heads to their rulers in Moscow while ingeniously evading or sabotaging their orders. The state bureaucracy has increased its power under Mr Putin compared to the Yeltsin years, but the Russian government remains impoverished and short of resources. Officials at every level are not paid a living wage. Bribery is all-pervasive.

It is a measure of the success of Mr Putin's government that he has conveyed a sense to Russians that there is a new, more honest hand on the tiller and that corruption is considerably less than under Mr Yeltsin. "In fact, corruption is at least at the same level now or perhaps slightly growing," Georgy Satarov, the president of Indem, a Russian think-tank was quoted as saying yesterday. Indem found that Russian companies paid no less than pounds 25bn in bribes and unofficial charges last year, making up 12 per cent of GDP.

The pattern of bribery is a guide to the weaknesses of the Russian state. The most blatant bribe-takers are the Russian traffic police, whose official wage in Moscow of pounds 44 a month is supplemented by pounds 200 in bribes. But the biggest bribes, surprisingly, are paid for health care and education because both systems are starved of state funds. Mr Satarov says more money is paid for higher education now because parents see it as a way to keep sons out of the army during the war in Chechnya.

Mr Putin has benefited from the financial crash of 1998, which ended the gross over-valuation of the rouble, as well as high oil prices. …