By Marshall Poland
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![]() In 1991 the Democratic Party and its leader, Boris Yeltsin, was left in control of Russia after replacing the communist party. The democrats had a major problem on their hands: in order to completely get rid of communism, they would have to do a great deal of damage to everything communism had sustained in the country. This included Russia's economy and political structure. The democrats had not expected to come into power as suddenly as they had, and as a result President Yeltsin had no clear plans regarding the transition that had to be made (Leone 189). When little was done in the first month of Yeltsin's rule to ameliorate the crisis facing the nation, the Russian people began to panic as they realized how severe an effect the removal of communism would have on both the economy and their everyday life. |
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On October 28, 1991
Yeltsin finally announced several drastic changes that would
begin the transition. Prices of common products, which had
been controlled by the government up until now, would be set
free by the end of the year, and privatization would begin.
This plan was known as "shock therapy." Privatization was
the individual purchase of Many factories were forced to shut down because the government no longer supported them financially in return for their goods. It was during this period of rapid privatization that Russia's "oligarchs" gained much of their wealth. Oligarchs are the handful of Russian tycoons who own everything from sports teams to major oil companies. A substantial portion of Russia's wealth today is owned by fifteen or so oligarchs (Karon). While these few businessmen benefited enormously from privatization, by 1992 about fifty percent of the Russian population lived below the poverty line. |
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This is not the first time an oligarch has been threatened by Putin for getting involved in political affairs. Boris Berezovsky and Vladimir Gusinsky, when each was faced with similar situations to Khodorkovsky's, chose exile over risking arrest by Putin. Vladimir Putin, who used to work for the KGB, wants to keep oligarchs out of politics (Gumbel 69). This may be because he feels threatened by them, but some argue that it could also be a result of anti-capitalism. Regardless of the cause, Putin's actions have dealt a blow to the progression of westernization in Russia and shaken the confidence of foreign investors in the country. |
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During the reign of Communism, the Party controlled all facets of Russian civilization, including the economy. Now that Russia has made the transition to a democratic government, the state needs to refrain from intervention in the economy in order to promote the free market system that has prevailed in western countries. If this happens, Russia will eventually regain its status as a major power in the world market. |
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Leone, Bruno, ed. The Collapse of the Soviet Union. San Diego: Greenhaven Press, Inc., 1999. *A collection of essays, speeches, excerpts from Russian legal codes, and other primary source documents that illustrate the fall of the USSR and its aftermath. Thompson, Clifford, ed. Russia and Eastern Europe. New York: The H.W. Wilson Company, 1998. *Excerpts from books, reprints of articles, and studies done by professors at various universities involving the current (1998) Russian state.
Central Intelligence Agency. The World Factbook: Russia. 1 Aug. 2003. http://www.cia.gov/cia/publications/factbook/geos/rs.html (24 Apr. 2003). *Provides up-to-date background information on Russia and short economical and political histories of the country. Freeze, Gregory L., ed. Russia: a history. New York: Oxford University Press, 1997. *Written by a team of professors and historians from the US, Russia, and other countries. Provides in-depth information on the direct aftermath of the collapse of the USSR, and Russia's privatization. Gumbel, Peter. "Putin vs. the Tycoon." Time. 10 Nov. 2003: 68-69. *Gives background information on the battle between Mikhail Khodorkovsky and Vladmir Putin, and compares the arguments for and against each of them. Karon, Tony. "Putin Reveals His Weakness." Time. 6 Nov. 2003. http://www.time.com (24 Apr. 2003). *An interview with TIME's former Moscow consultant about how the arrest of Khodorkovsky relates to the economic and political struggle Russia has been engaged in over the last decade. http://www.xs4all.nl/~roman1/yelcin060599.jpg http://www.usa2net.net/images/businessman.gif http://www.eingang.org/MichaTales/MichaTales2/scared.gif http://www.state.wy.us/state/wyoming_news/general/images/animals/bear.jpg |