Russia’s economy went into continue decline with the break-up of the Soviet Union in 1991.State-owned industries were auctioned off to entrepreneurs at lowest prices, people on fixed incomes faced a sharp drop in their standard of living.
When Mr. Yeltsin obtained power in late 1991, the Soviet economy was falling apart. Mr. Yeltsin trusted a brilliant young economist, Yegor Gaidar, to take control. Mr. Gaidar, Anatoly Chubias and Sergei Vasiliev,had an understanding of where they had to go.
Mr. Gaidar freed prices in early January 1992 and began to dismantle Gosplan, which was completed by July 1992. Mr. Gaidar has correctly noted that Western economists had only a minor role in the economic transformation, almost totally accomplished by a few very able Russian economists.Still guided by the souls, the Russian currency had been debased, and the price decontrol led to rampant inflation due to release of the repressed inflation of the old Soviet regime.
These were tough times for the Russian people as they had to almost instantaneously move to a market economy in which they had no experience. Despite the tough times, Mr. Yeltsin took the front position.He made Mr. Gaidar acting prime minister in June 1992. By the fall of 1992, the situation for many Russians was desperate. For Mr. Yeltsin to retain any power, Mr. Gaidar had to be sacrificed and so was fired that December.
The low point was 1998, when an economic crisis led to a big devaluation of the rouble. Soaring oil revenues have boosted state coffers and led to an economic recovery, with Russia paying off its international debts.
By destroying Gosplan, Mr. Yeltsin made it almost impossible to recreate a truly communist economy.
Putin and his fellows, having seen both free-market capitalism and Soviet communism, have no wish to bring the old regime back. However, they controls the major industries (particularly those that generate large amounts of foreign exchange) and the press through partial ownership, regulation. The rest of the economy is allowed to run relatively free.Russia’s economy is still much smaller than other G8 countries, and measured by income per capita, income is less than one-tenth of G8 levels.
Days before he was elected to the Russian presidency in 2000, Mr.Putin told that Russia was “part of European culture” and that he “would not rule out” the possibility of it joining Nato.As Putin marks the 15th anniversary of acceding to power on 7 May 2000, Russia has changed beyond all recognition from the chaotic, open free-for-all it was under Yeltsin. Internationally it faces isolation, sanctions, a new cold war.
When Putin arrived in office, Russia was just emerging from the disastrous market reforms of the 1990s and the 1998 financial crisis. The new president had no grand economic vision: while he slashed taxes to benefit business, he also renationalised key sectors, starting with the breakup of Mikhail Khodorkovsky’s Yukos oil company in 2003.Unused manufacturing capacity and rising prices for oil, Russia’s main export, helped usher in an era of unprecedented prosperity that Putin is still remembered for, with real disposable income doubling between 1999 and 2006.
At home, despite economic decline Putin enjoys perhaps the highest popularity rating of any Kremlin leader – an approval rating that topped 86% in February.
GraphsPro 