Post cold war Russia
The U.S.S.R. legally ceased to exist on December 31, 1991. The new state, called the
Russian Federation, set off on the road to democracy and a market economy without any
clear conception of how to complete such a transformation in the world’s largest country.
Like most of the other former Soviet republics, it entered independence in a state of
serious disorder and economic chaos.
The Yeltsin presidency (1991–99)
Upon independence, Russia faced economic collapse. The new Russian government not
only had to deal with the consequences of the mistakes in economic policy of the
Gorbachev period, but it also had to find a way to transform the entire Russian economy.
In 1991 alone, gross domestic product (GDP) dropped by about one-sixth, and the budget
deficit was approximately one-fourth of GDP. The Gorbachev government had resorted
to printing huge amounts of money to finance both the budget and the large subsidies to
factories and on food at a time when the tax system was collapsing.
In an effort to bring goods into stores, the Yeltsin government removed price controls on
most items in January 1992—the first essential step toward creating a market-based
economy. Its immediate goal was achieved. However, it also spurred inflation, which
became a daily concern for Russians, whose salaries and purchasing power declined as
prices for even some of the most basic goods continued to rise. The government
frequently found itself printing money to fill holes in the budget and to prevent failing
factories from going bankrupt. By 1993 the budget deficit financed by the printing of
money was one-fifth of GDP
In 1995 the government, through loans secured from the IMF and through income from
the sale of oil and natural gas, succeeded in stabilizing the national currency by
establishing a ruble corridor. This corridor fixed the exchange rate of the ruble that the
Russian Central Bank would defend. Consequently, the rate of inflation dropped, and
some macroeconomic stabilization ensued. However, the government continued to
borrow large sums of money on domestic and foreign markets while avoiding real
structural reforms of the economy.
By failing to establish an effective tax code and collection mechanisms, clear property
rights, and a coherent bankruptcy law and by continued support of failing industries, the
government found it increasingly expensive to maintain an artificially set ruble exchange
rate. The problem was that the government-set exchange rate did not reflect the country’s
economic reality and thereby made the ruble the target of speculators. As a result, the
ruble collapsed in 1998, and the government was forced to withhold payments on its debt
amid a growing number of bankruptcies.
The ruble eventually stabilized and inflation diminished, but the living standards of most
Russians improved little, though a small proportion of the population became very
wealthy. Moreover, most economic gains occurred in Moscow, St. Petersburg, and a
handful of other major urban areas, while vast tracts of Russia faced economic
depression.
Another element of economic reform was the privatization of Russian industries.
Reformists in the Yeltsin government sought to speed privatization, hoping that the threat
of a return to communism would be more remote once a Russian capitalist class had
developed. The reformists, like many Western economists, believed that only by
privatizing factories and enterprises and letting them fight for survival would the
economy have any hope of recovering. Initially, the government implemented a voucher
system according to which every citizen could in theory become a stakeholder in Russian
industry and its privatization.
Economic challenges
The second wave of privatization occurred in 1994–95. However, to the average Russian,
the process seemed to benefit solely the friends of those in power, who received large
chunks of Russian industry for little. In particular, Russia’s companies in the natural
resource sector were sold at prices well below those recommended by the IMF to figures
who were close to “the Family,” meaning Yeltsin and his daughter and their allies in the
government.
The stripping of factories played a major role in the public’s disenchantment with the
development of capitalism in Russia. To many Russians, it seemed that bandit capitalism
had emerged. The majority of the population had seen their living standards drop, their
social services collapse, and a great rise in crime and corruption. As a result, Yeltsin’s
popularity began to plummet.
Political changes
Having played a key role in defeating the attempted coup against Gorbachev in 1991,
Yeltsin saw his popularity surge. A skillful politician, he was first elected president of the
Russian Soviet Federated Socialist Republic in 1991 before the collapse of the U.S.S.R,
and he was reelected in 1996. Although he had come to represent for many the face of
political and economic reform, his first priority was the preservation of his own power
and authority. In dealing with those around him in both the government and the
bureaucracy, Yeltsin effectively utilized a divide-and-rule strategy that led to the
emergence of various factions that battled each other. Indeed, in some cases bureaucrats
spent more time in conflict with each other than they did governing the country.
When the Soviet Union collapsed, the Russian Federation continued to be governed
according to its Soviet-era constitution. The office of president had been added to the
political structure of the Russian Soviet Federated Socialist Republic in 1991. However,
the constitution did not specify which branch, legislative or executive, held supreme
power. Political differences over various issues manifested themselves as constitutional
conflicts, with Yeltsin’s supporters arguing that ultimate power rested with the president
and his opponents charging that the legislature was sovereign.
Personality clashes between Yeltsin and the parliamentary leadership led to a break
between the legislative and executive branches.
Conflict between parliamentary and presidential supporters
Refrendum
Four questions were posed to the Russian people, written by the Congress of People’s
Deputies to embarrass Yeltsin: (1) Do you trust the President of the Russian Federation,
Boris Nikolaevich Yeltsin? (2) Do you approve of the socioeconomic policies
implemented by the President of the Russian Federation and the government of the
Russian Federation since 1992? (3) Do you consider it essential to hold pre-term
elections for the presidency of the Russian Federation? and (4) Do you consider it
essential to hold pre-term elections for the People’s Deputies of the Russian Federation?
The rifts could not be abolished
In the summer of 1993 Yeltsin established a Constitutional Convention to draw up a new
post-Soviet constitution. The parliament also set up its own Constitutional Committee.
Inevitably, presidential and parliamentary constitutional drafts were contradictory, and
the increasing number of regional leaders who supported the parliamentary version
worried Yeltsin. Thus, the referendum results did not end the political conflict between
Yeltsin and the parliament, and that conflict grew more intense on September 21, 1993,
when Yeltsin issued a series of presidential decrees that dissolved the parliament and
imposed presidential rule that would exist until after elections to a new parliament and a
referendum on a new draft constitution were held in December.
Weak governance and poor political system
led to..
During Yeltsin’s presidential terms, the weakened Russian state failed to fulfill its basic
responsibilities.
The legal system, suffering from a lack of resources and trained personnel and a legal
code geared to the new market economy, was near collapse.
Low salaries led to a drain of experienced jurists to the private sector;
there was also widespread corruption within law enforcement and the legal system, as
judges and police officials resorted to taking bribes to supplement their meagre incomes.
Ethnic relations and Russia’s “near-abroad
Post-Soviet Russia emerged with formidable ethnic problems. Many of the autonomous
ethnic regions that were part of the empire—formed before 1917—no longer wished to
be under Russian hegemony, and ethnic Russians comprised less than four-fifths of the
population of the Russian Federation.
Inevitably, the question of ethnic identity emerged. The term rossiyanin was used to
designate a citizen of the Russian Federation and was not given any ethnic Russian
connotation.
Yeltsin established a committee to construct a Russian identity and national idea that
could be used to rally people around the new Russian Federation. The committee failed
after several years of attempts.
The Russian Orthodox Church reestablished itself as a force in the moral guidance of
reborn Russia, but there were many other religions among the minority groups,
particularly Islam. Russia continued to face problems associated with governing a
multiethnic state within a democratic framework.
The country’s health, education, and social services were also under incredible strain.
Due to a lack of resources, law-enforcement agencies proved unable to combat the rising
crime.
The collapse of medical services also led to a decline in life expectancy and to concerns
over the negative rate of population growth;
doctors and nurses were underpaid, and many hospitals did not have enough resources to
provide even basic care.
Russian foreign policy
The collapse of the Soviet Union left the United States as the sole superpower. As a
result, the Russian government tried to not only come to terms with the loss of empire
and superpower status but also create a foreign policy doctrine reflecting the new global
geopolitical reality. Russia’s increasing concern with U.S. hegemony in the world system
became a constant theme in Russian foreign policy,
In an attempt to counter U.S. power, Moscow strengthened its political and military
relations with China and India, although friction between New Delhi and Beijing made it
unlikely that a strong trilateral alliance would emerge to challenge the United States.
Russia’s relations with Iran and differences in approaches to Iraq further increased
tensions in Russian-U.S. relations
Putin presidency
He was Yeltsin’s choice to be his prime minister.
As prime minister, Putin blamed Chechen secessionists for the bombing of several
apartment buildings that killed scores of Russian civilians, prompting the Moscow
government to send Russian forces into the republic once again.
Putin’s popularity soared, and Yeltsin, having chosen Putin as his successor, resigned on
December 31, 1999. Putin became acting president, and his first official act as president
was to grant Yeltsin a pardon for any illegal activities he might have committed during
his administration.
Despite worries arising from his years working for the intelligence services, many
Russians came to believe that Putin’s coolness and decisiveness would enable him to
establish economic and political order in the country and deal with the Chechen problem.
After years of Yeltsin’s unpredictable behaviour, the upsurge in violent crime, and the
decline in both living standards and Russia’s prestige abroad, Russians were ready for a
leader with an agenda and the mental capacity to implement it.
Putin seemed to be that leader.
Putin soon moved to reassert central control over the country’s 89 regions by dividing the
country into seven administrative districts, each of which would be overseen by a
presidential appointee. The new districts were created to root out corruption, keep an eye
on the local governors, and ensure that Moscow’s will and laws were enforced.
Putin even enjoyed success in taming the independent-minded regions, as the republics of
Tatarstan and Bashkortostan reluctantly brought their constitutions into accord with that
of the Russian Federation in 2002.
Work to do
Look for Putin's presidential foreign affairs.
The steps Putin took to limit the political and economic power of the infamous oligarchs.
His political and economic reforms
Ukrain crisis
For further reading
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