This year is parliamentary election year. During Boris Yeltsin's presidency, election periods like this meant the government produced only a minimum of activity, giving way instead to primitive populist campaigns about the need to pay wage arrears and pensions. No one ever gave a thought to pushing through market reforms during these times. With the opposition causing Yeltsin serious problems, all unpopular measures came to an end whenever elections were due. Today, the Kremlin has far more clout, the opposition is weak and there is no obvious tension in the economy, so how will the authorities behave this year?

There won't be any primitive populism, it seems. But the government is also unlikely to take the energetic measures needed to resolve the most difficult economic and political problems.

This is clearly illustrated by the government's economic policy. The economic outcome for 2002 was modest – GDP growth of 4 percent. But the government calls this a success and has forecast a similar rate of growth for 2003. The calculation is psychologically sound: Russians are willing to see any growth as an achievement. After all, the stagnation persisted right through the 1970s-1980s and was followed by a decade of uninterrupted decline accompanied by high inflation and repeated losses of personal savings. After this experience, four years of growth and no economic upheavals seems like a real blessing.

But economists know that four years of growth after 30 years of stagnation and recession aren't enough to resolve any of the country's persistent problems. It's also clear that lasting but slow growth isn't enough to really improve the social climate. Essentially, Russia has to repeat China's feat of achieving annual GDP growth of 8-10 percent for more than 20 years.

The problem is that, as an older industrial country, Russia no longer has a huge pool of labor in the villages eager to head into the cities. Instead of copying the Chinese model, Russia has to find its own sources of growth. Above all, it has to bring down taxes on manufacturers.

Everyone agrees with this, it seems. From time to time the president calls on the government to be more ambitious in its economic objectives, and the government talks about the need to reduce taxes. But rather than dramatic tax cuts, what we see is an imitation of tax reform. It's not hard to understand why this is, given that tax cuts mean cuts in state spending, which in turn inevitably affects the interests of various political forces.

A similar imitation of activity is going on in foreign policy. At first glance, Russia has strengthened its positions in the developed world, becoming a full-fledged member of the G8, gaining official recognition as a country with a market economy and getting close to joining the World Trade Organization.

But at the same time, Russia still hasn't solved any of its strategic problems. This is true to the west, where Russia hasn't yet obtained an acceptable solution to the Kaliningrad issue, and to the south, where the country has been losing ground in Georgia, Azerbaijan, Turkmenistan and Kyrgyzstan. It is also true to the east, as can be seen by the Japanese prime minister's recent visit to Moscow during which intensive negotiations on a peace treaty and resolution of the territorial dispute between the two countries made no headway at all.

The imitation of action in solving the most complicated and dangerous problem of Chechnya has been particularly futile. The Kremlin has declared its desire for peace and really does need the war to end, it says it wants a political rather than a military solution and that it is willing to hold negotiations. But the surprising thing is that it doesn't know who to negotiate with, as if it doesn't know who exactly it is fighting.

It's obvious that the military operation, having become a guerilla war, means the federal forces are fighting the Chechen population. Logically then, negotiations must be held with this same population, that is, with whomever it has elected as its representative.

It's well known that most of the population considers its representative to be Aslan Maskhadov, the president it elected lawfully and with Moscow's approval. But the Kremlin doesn't want to talk to Maskhadov.

Indeed, Moscow has found a way of overturning the argument that Maskhadov is the lawfully elected president by preparing a referendum on a new Chechen constitution and new presidential elections, which Akhmad Kadyrov, appointed head of the Chechen Administration by the Kremlin, hopes to win. Of course, Moscow can organize a referendum and elections under the gun barrels of the 100,000-strong federal force in Chechnya, but how will this bring the end of the guerilla war any closer?

The current government has benefited from exceptionally favorable economic and political circumstances that have enabled it to achieve some more or less acceptable results merely through making an imitation of activity, but these circumstances, starting with high oil prices, will not last forever. Genuine far-reaching economic and political change is needed if the country is to be ready to handle well whatever challenges the future will bring. Above all, this means completing the market reforms that have yet to be fully implemented and ending the war in Chechnya.