Russia's Economic Woes Essay

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Russia's Economic Woes In a dramatic and memorable end to the reign of the Soviet Union, the so-called worker's paradise, on December 25th, 1991, the Soviet flag was mournfully lowered from the Kremlin walls for the last time. Finally the reforms and decentralization of the Soviet state that had started in 1980's had met its climax with the destruction of the state itself. The last president of the Soviet Union, Mikhail Gorbachev, declared on national TV the formal end of the Union and handed over full powers of the Russian Federation to Russian president Boris Yeltsin. Within a day, the Supreme Soviet also disbanded itself and Soviet institutions gradually faded out or became transformed into democratic institutions. From this…show more content…
Twenty five percent of the population went into poverty, corruption was rampart, and segments of the economy had gone "underground" to escape backbreaking taxes and bureaucratic regulation. To help alleviate the growing problems, the government began to step in and started to raise interest rates and taxes, while cutting back social and industrial subsidies. These policies only furthered widespread hardship as many former state-owned businesses were forced to shut down and brought about a prolonged depression. The mass unemployment and hyperinflation signaled the rise of the Communist Party of the Russian Federation, who expressed the frustration the people had with the growing income disparity and economic turmoil as a result of the Yeltsin reforms. Russia never fully recovered from the first depression in 1992 and the consequent political and economic crises when Russia's recovering economy collapsed completely in 1998. Even the prosperous oil and natural gas industries, who account for 80% of Russian exports, were crippled by the collapse in 1998. Foreign investors fled the country as inflation and interest rates spiraled out of control. Russia managed to bounce back by 1999 due to rising world oil prices, but Yeltsin was soon forced to resign and Vladimir Putin took his place as President. Under Putin, there has been relative economic stability in Russia, with Putin's crackdown on the Oligarchs and his attempts to alleviate the income
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