exporter in 2007.

Romania
Romania, which joined the European Union on 1 January 2007,
began the transition from Communism in 1989 with a largely obsolete
industrial base and a pattern of output unsuited to the country's
needs. The country emerged in 2000 from a punishing three-year
recession thanks to strong demand in EU export markets. Domestic
consumption and investment have fueled strong GDP growth in recent
years, but have led to large current account imbalances. Romania's
macroeconomic gains have only recently started to spur creation of a
middle class and address Romania's widespread poverty. Corruption
and red tape continue to handicap its business environment.
Inflation rose in 2007 for the first time in eight years, driven in
part by the depreciation of the currency, rising energy costs, a
nation-wide drought affecting food prices, and a relaxation of
fiscal discipline. Romania hopes to adopt the euro by 2014.

Russia
Russia ended 2007 with its ninth straight year of growth,
averaging 7% annually since the financial crisis of 1998. Although
high oil prices and a relatively cheap ruble initially drove this
growth, since 2003 consumer demand and, more recently, investment
have played a significant role. Over the last six years, fixed
capital investments have averaged real gains greater than 10% per
year and personal incomes have achieved real gains more than 12% per
year. During this time, poverty has declined steadily and the middle
class has continued to expand. Russia has also improved its
international financial position since the 1998 financial crisis.
The federal budget has run surpluses since 2001 and ended 2007 with
a surplus of about 3% of GDP. Over the past several years, Russia
has used its stabilization fund based on oil taxes to prepay all
Soviet-era sovereign debt to Paris Club creditors and the IMF.
Foreign debt is approximately one-third of GDP. The state component
of foreign debt has declined, but commercial debt to foreigners has
risen strongly. Oil export earnings have allowed Russia to increase
its foreign reserves from $12 billion in 1999 to some $470 billion
at yearend 2007, the third largest reserves in the world. During
President PUTIN's first administration, a number of important
reforms were implemented in the areas of tax, banking, labor, and
land codes. These achievements have raised business and investor