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Formerly the preeminent republic of the Union of Soviet Socialist Republics, Russia has

been an independent nation since the dissolution of the Soviet Union in 1991. Because of

its great size, its natural resources, and its political domination, the Russian Federation

played a leading role in the economy of the Soviet Union. In the years preceding the

disintegration of the union in 1991, the economy of Russia and the union as a whole was

in decline. In 1992, immediately after the separation, the Russian government

implemented a series of radical reforms. Price controls were abolished as the beginning

of a transition from a centrally controlled economy to a market economy. An immediate

series of sharp price increases caused extreme hardships for the Russian people.1

Inventor of the fictional five-year plan,2 the fake harvest, Russia introduced

another novel economic concept in 1996. It was a society modeled after the capitalist

society. High expectations of economic growth even with “shock therapy”--

unemployment, social discontent and opportunities for corruption;3 influence of western

politicians and the U.S. policy; and failing to completely reform the communistic system

were some factors to why some became rich but led many to misery and an early death.

Despite the huge infusions of Western money, millions of ordinary Russians struggled to

survive in an economy neither capitalist nor communist, but something brand new and

strange which ultimately led to the failure of economic reform in Russia.4



In the Fall of 1996, Boris Yeltsin won the presidential election in Russia. He was



viewed as the “personification of reform in Russia....who had vanquished the Communist


...