This publication is an offshoot of the joint IMEMO – SIPRI project ‘The Russian edition of the SIPRI Yearbook: Armament, Disarmament and International Security’. The studies in this booklet reflect two major developments of the past year affecting the Russian security environment: the crisis in the North Caucasus in August (with its local, regional and global ramifications) and the beginning of the worldwide financial and economic down-turn. The authors offer analyses of various critical issues: the political fallout of the Caucasian conflict; the standoff over Iran’s nuclear program; the prevention of the placement of weapons in outer space; naval arms control and countering terrorism at sea; humanitarian and military aspects of cluster munitions. Problems of Russian defense-industrial complex are addressed in chapters describing Russia’s military-technical cooperation with foreign states and resource allocation for defense needs in the 2009–2011 Federal Budget.