||This thesis studies the process of transformation in Russia since 1998, when the Russian financial crisis emerged. It revealed weaknesses of the Russian economy and influenced the economic and political situation. Its occurrence was not an accident and had had its roots in the previous years. In this connection I introduce a short characterization of the period before the crisis. The first chapter contains the analysis of assumptions of the crisis and factors that induced it. The second chapter describes Putin’s coming, his targets, changes in the political system and Russian economic trends of that period. In the third chapter I will look into the position of the state in the world economy, define briefly its relations with different international and regional organizations, eventually participation in them. Then I will interrogate the relationship between the Russian Federation and the European Union.