During and after the disintegration of the USSR, when wide-ranging reforms including privatisation and market and trade liberalization were being undertaken, the Russian economy went through a major crisis. The period was characterized by deep contraction of output, with GDP declining by roughly 50% between 1990 and the end of 1995 and industrial output declining by over 50%. In October 1991, Yeltsin announced that Russia would proceed with radical, market-oriented reform along the lines of "shock therapy", as recommended by the United States and International Monetary Fund. Price controls were abolished, privatization was started. Millions plunged into poverty, from 1.5% of the population living in poverty in the late Soviet era, to 39%-49% by mid-1993. Delays in wage payment became a chronic problem with millions being paid months, even years late. Russia took up the responsibility for settling the USSR's external debts, even though its population made up just half of the population of the USSR at the time of its dissolution. The privatization process largely shifted control of enterprises from state agencies to groups of individuals with inside connections in the Government and the mafia. Corruption became an everyday rule of life. Many of the newly rich mobsters and businesspeople took billions in cash and assets outside of the country in an enormous capital flight. The depression of state and economy led to the collapse of social services; the birth rate plummeted while the death rate skyrocketed. The early and mid-1990s saw extreme lawlessness, rise of criminal gangs and violent crime. The 1990s were plagued by armed conflicts in the Northern Caucasus, both ethnic conflicts between local groups and separatist Islamist insurrections against federal power. Since the Chechen separatists had declared independence in the early 1990s, an intermittent guerrilla war was fought between the rebel groups and the Russian military. Terrorist attacks against civilians carried out by separatists, most notably the Moscow theater hostage crisis and Beslan school siege, caused hundreds of deaths and drew worldwide attention. Putin suppressed the Chechen insurgency, although sporadic violence still occurs throughout the Northern Caucasus. High oil prices and initially weak currency followed by increasing domestic demand, consumption and investments has helped the economy grow for nine straight years, improving the standard of living and increasing Russia's influence on the world stage. While many reforms made during the Putin presidency have been generally criticized by Western nations as un-democratic, Putin's leadership over the return of order, stability, and progress has won him widespread popularity in Russia. On 2 March 2008, Dmitry Medvedev was elected President of Russia, whilst Putin became Prime Minister.
Following the October Revolution, a civil war broke out between the new regime and the counter-revolutionary White movement, while the Treaty of Brest-Litovsk concluded hostilities with the Central Powers in World War I. Russia lost its Ukrainian, Polish, Baltic, and Finnish territories by signing the treaty. The Allied powers launched a military intervention in support of anti-Communist forces and both the Bolsheviks and White movement carried out campaigns of deportations and executions against each other, known respectively as theRed Terror and White Terror. By the end of the Russian Civil War the Russian economy and infrastructure were heavily damaged. During the same period, the famine of 1921 claimed 5 million victims. The Russian SFSR together with three other Soviet republics formed the Soviet Union on 30 December 1922. Out of the15 republics that later constituted the Soviet Union, the Russian Soviet Federative Socialist Republic, the largest republic in terms of size and making up over half of the total USSR population, dominated the Soviet Union for its entire 69-year history; the USSR was often referred to, though incorrectly, as "Russia" and its people as "Russians". Following Lenin's death in 1924, Joseph Stalin, an elected General Secretary of the Communist Party, managed to put down all opposition groups within the party and consolidate much power in his hands. Leon Trotsky, the main proponent of the world revolution, was exiled from the Soviet Union in 1929, and Stalin's idea of socialism in one country became the primary line. In 1930s a number of open political trials gained much attention in the USSR and the world. The continued internal struggle in the Bolshevik party culminated in the Great Purge, a period of mass repressions in 1937-38, in which hundreds of thousands of people were executed, including experienced military leadership. Since the end of 1920s, the government launched a planned economy, rapid industrialization of the largely rural country, and collectivization of its agriculture. Millions of citizens were relocated during the dekulakization campaign that accompanied the collectivization. Millions of people passed through the Gulag from 1929 to 1953,with millions more being deported and exiled to remote areas of the Soviet Union.The temporary transitional disorganisation of the country's agriculture, combined with the harsh state policies and a drought, led to the famine of 1932–1933. However, though with a heavy price, the Soviet Union was transformed from an agrarian economy to a major industrial powerhouse in a short span of time. In 1933, in Germany, Hitler and his Nazi party came to power, being outspoken enemies of communism and proponents of external aggression and German expansion. Very soon the Soviet foreign policy changed dramatically, completely dropping the idea of seeking the world revolution (the very mention of it was eradicated from the new 1936 Soviet Constitution). The USSR entered the League of Nations, and Soviet diplomacy tried to establish counter-Nazism security pacts with major European countries, but these attempts mostly failed. The Appeasement policy of Great Britain and France towards Hitler's annexions of Ruhr, Austria and finally ofCzechoslovakia (following the Munich agreement of 1938) enlarged the might of Nazi Germany and put a threat of war to the Soviet Union. Around the same time the German Reich allied with Japanese Empire, a rival of the USSR on the Far East and an open enemy in the Soviet–Japanese Border Wars in 1938-1939. In August of 1939, after another failure of talks with Britain and France, the Soviet government agreed to conclude the Molotov-Ribbentrop Pact with Germany, pledging non-aggression between the two countries and dividing their spheres of influence in Eastern Europe. This allowed Hitler to finally start World War II and to conquer Poland,France and other countries acting on single front. At the same time the USSR was able to regain some of the former territories of the Russian Empire in Eastern Europe (see Soviet invasion of Poland and Winter War), and to gain one and a half more years for building up the Soviet military. On 22 June 1941, Nazi Germany broke the non-aggression treaty and invaded the Soviet Union with the largest and most powerful invasion force in human history,[74] opening the largest theater of the Second World War. Although the German army had considerable success early on, their onslaught was halted in the Battle of Moscow. Subsequently the Germans were dealt major defeats first at the Battle of Stalingrad in the winter of 1942–1943, and then in the Battle of Kursk in the summer of 1943. Another German failure was the battle of Leningrad, in which the city was fully blockaded on land between 1941–44 by German and Finnish forces, suffering starvation and more than a million deaths, but never surrendering. Under Stalin's administration and the leadership of such prominent commanders as Georgy Zhukov and Konstantin Rokossovsky, Soviet forces drove through Eastern Europe in 1944–45 and captured Berlin in May of 1945. After marking this by the Moscow Victory Parade of 1945, the Soviet Army ousted Japanese from China's Manchukuo and North Korea, contributing to the allied victory over Japan. 1941–1945 period of World War II is known in Russia as Great Patriotic War. In this conflict, which included many of the most lethal battle operations in human history, Soviet military and civilian deaths were 10.6 million and 15.9 million respectively, accounting for about a third of all World War II casualties. The Soviet economy and infrastructure suffered massive devastation but the Soviet Union emerged as an acknowledged superpower. The Red Army occupied Eastern Europe after the war, including the eastern half of Germany. Dependent socialist governments were installed in these satellite states. The USSR maintained control over these nations by many means, sometimes by military force, as in the Hungarian Revolution of 1956. Becoming the world's second nuclear weapons power, the USSR established the Warsaw Pact alliance and entered into a struggle for global dominance with the United States, which became known as the Cold War. The Soviet Union exported its Communist ideology to newly formed independent allies, the People's Republic of China and the Democratic People's Republic of Korea, while also helping these countries in industrialization and development. Subsequently the ideas of Communism gained ground inCuba and many other countries. After Stalin's death and a short period of collective leadership, a new leader Nikita Khrushchev denounced the cult of Stalin's personality and started the process of de-Stalinization. Gulaglabor camps were abolished and a great many of prisoners released; the general easement of repressive policies became known later as Khruschev thaw. In 1957 the Soviet Union launched the world's first artificial satellite, Sputnik 1, and the Russian cosmonaut Yuri Gagarin became the first human being to orbit the Earth aboard the first manned spacecraft, Vostok 1, on April 12, 1961. Tensions with the United States heightened when the two rivals clashed over the deployment of the U.S. Jupiter missiles in Turkey and Soviet missiles in Cuba. Following the ousting of Khrushchev, another period of collective rule ensued, until Leonid Brezhnev established himself in the early 1970s as the pre-eminent figure in Soviet politics. Brezhnev's rule oversaw economic stagnation, since the reforms, attempted by the Prime Minister Alexey Kosygin, were stifled. Those reforms had been aimed into shifting the emphasis of the Soviet economy from heavy industry and military production to light industry and the production ofconsumer goods. However that would mean significant decentralization of economy and implementing capitalist-like elements, and the Communist leadership wouldn't accept this. In 1979 the Soviet forces entered Afghanistan at the request of the existing communist government. The subsequent occupation drained economic resources and dragged on without achieving meaningful political results. Ultimately Soviet forces were withdrawn from Afghanistan in 1989 because of international opposition, persistent anti-Soviet guerilla warfare (enhanced by the U.S.), and a lack of support from Soviet citizens. Tensions rose between the U.S. and Soviet Union in the early 1980s, fueled by anti-Soviet rhetoric in the U.S., the ongoing Soviet occupation of Afghanistan, theSDI proposal, and the controversial downing in 1983 of Korean Air Lines Flight 007 by the Soviets. Prior to 1991, the Soviet economy was the second largest in the world, but during its last years it was afflicted by shortages of goods in grocery stores, huge budget deficits and explosive growth in money supply leading to inflation. From 1985 onwards, the last Soviet leader Mikhail Gorbachevintroduced the policies of glasnost (openness) and perestroika (restructuring) in an attempt to modernize the country and make it more democratic. However, this unexpectedly led to the rise of nationalist movements and dissolution of the Soviet Union. In August 1991, an unsuccessful military coup, directed against Gorbachev and aimed at preserving the Soviet Union, instead led to its collapse. InRussian SFSR, Boris Yeltsin came to power and declared the end of socialist rule. The USSR splintered into fifteen independent republics and wasofficially dissolved in December 1991. Boris Yeltsin was elected the President of Russia in June 1991, in the first direct presidential election in Russian history.
The Russian Federation comprises 83 federal subjects. These subjects have equal representation—two delegates each—in the Federation Council. However, they differ in the degree of autonomy they enjoy. Federal subjects are grouped into 8 federal districts, each administered by an envoy appointed by the President of Russia. Unlike the federal subjects, the federal districts are not a subnational level of government, but are a level of administration of the federal government. Federal districts' envoys serve as liaisons between the federal subjects and the federal government and are primarily responsible for overseeing the compliance of the federal subjects with the federal laws.
Russia assumed control of Soviet assets abroad and most of the Soviet Union's production facilities and defense industries.[112] The Russian military is divided into the Ground Forces, Navy, and Air Force. There are also three independent arms of service: Strategic Rocket Forces, Military Space Forces, and the Airborne Troops. In 2006, the military had 1.037 million personnel on active duty. Russia has the largest stockpile of nuclear weapons in the world. It has the second largest fleet of ballistic missile submarines and is the only country apart from the U.S. with a modern strategic bomber force. Russia's tankforce is the largest in the world, it's surface navy and air force are among the strongest. The country has a large and fully indigenous arms industry, producing most of its own military equipment with only few types of weapons imported. Russia is the world's top supplier of arms, a spot it has held since 2001, accounting for around 30% of worldwide weapons sales and exporting weapons to about 80 countries. It is mandatory for all male citizens aged 18–27 to be drafted for a year of service in Armed Forces; the government plans to increase the proportion of contract servicemen to 70% by 2010. Defense expenditure has quadrupled over the past six years and official government military spending for 2008 were $40 billion but according to Stockholm International Peace Research Institute estimates $58 billion, making it the fifth largest in the world, though various sources, including US intelligence,and the International Institute for Strategic Studies, have estimated Russia’s military expenditures to be considerably higher. Currently, the military is undergoing a major equipment upgrade worth about $200 billion between 2006 and 2015. Defense Minister Anatoliy Serdyukov supervises the major reforms aimed to transform a mass mobilization army into a smaller force of contract soldiers.
At the start of the 18th century the reforms of Peter the Great (the founder of Russian Academy of Sciences andSaint Petersburg State University) and the work of such champions as polymath Mikhail Lomonosov (the founder ofMoscow State University) gave a great boost for development of science and innovation in Russia. In the 19th and 20th centuries the country produced a large number of great scientists and inventors. Nikolai Lobachevsky, a Copernicus of Geometry, developed the non-Euclidean geometry. Dmitry Mendeleev invented thePeriodic table, the main framework of the modern chemistry. Nikolay Bernardos introduced the arc welding, further developed by Nikolay Slavyanov, Konstantin Khrenov and other Russian engineers. Gleb Kotelnikov invented the knapsack parachute, while Evgeniy Chertovsky introduced thepressure suit. Pavel Yablochkov and Alexander Lodygin were great pioneers of electrical engineering and inventors of early electric lamps. Alexander Popov was among the inventors of radio, while Nikolai Basov and Alexander Prokhorov were co-inventors of lasers and masers. Igor Tamm, Andrei Sakharov and Lev Artsimovich developed the idea of tokamak for controlled nuclear fusion and created its first prototype, which finally led to the modern ITER project. Many famous Russian scientists and inventors were émigrés, like Igor Sikorsky and Vladimir Zworykin, and many foreign ones worked in Russia for a long time, like Leonard Euler and Alfred Nobel. The greatest Russian successes are in the field of space technology and space exploration. Konstantin Tsiolkovsky was the father of theoretical austronautics.His works had inspired leading Soviet rocket engineers such as Sergey Korolyov, Valentin Glushko and many others that contributed to the success of the Soviet space program at early stages of the Space Race and beyond. In 1957 the first Earth-orbiting artificial satellite, Sputnik 1, was launched; in 1961 on 12 April the first human trip into space was successfully made byYury Gagarin; and many other Soviet and Russian space exploration records ensued, including the first spacewalk performed by Alexey Leonov, the first space exploration rover Lunokhod-1 and the first space station Salyut 1. Nowadays Russia is the largest satellite launcher and the only provider of transport for space tourism services. Other technologies, where Russia historically leads, include nuclear technology, aircraft production and arms industry. The creation of the first nuclear power plant along with the first nuclear reactors for submarines and surface shipswas directed by Igor Kurchatov. NS Lenin was the world's first nuclear powered surface ship as well as the firstnuclear powered civilian vessel, and NS Arktika became the first surface ship to reach the North Pole. A number of prominent Soviet aerospace engineers, inspired by the theoretical works of Nikolai Zhukovsky, supervised the creation of many dozens of models of military and civilian aircraft and founded a number of KBs(Construction Bureaus) that now constitute the bulk of Russian United Aircraft Corporation. Famous Russian airplanes include the first supersonic passenger jet Tupolev Tu-144 by Alexei Tupolev, MiG fighter aircraft series by Artem Mikoyan and Mikhail Gurevich, and Su series byPavel Sukhoi and his followers. MiG-15 is the world's most produced jet aircraft in history, while MiG-21 is the most produced supersonic aircraft. During World War II era Bereznyak-Isayev BI-1 was introduced as the first rocket-powered fighter aircraft, and Ilyushin Il-2 bomber became the most produced military aircraft in history. Polikarpov Po-2 Kukuruznik is the world's most produced biplane, and Mil Mi-8 is the most produced helicopter. Famous Russian battle tanks include T-34, the best tank design of World War II,and further tanks of T-series, including the most produced tank in history, T-54/55, the first fully gas turbine tank T-80 and the most modern Russian tank T-90. The AK-47 and AK-74 by Mikhail Kalashnikovconstitute the most widely used type of assault rifle throughout the world — so much so that more AK-type rifles have been manufactured than all other assault rifles combined. With these and other weapons Russia for a long time has been among the world's top suppliers of arms, accounting for around 30% of worldwide weapons sales[114] and exporting weapons to about 80 countries.[115] With such technological achievements, however, since the time of Brezhnev stagnation Russia was lagging significantly behind the West in a number of technologies, especially those concerning energy conservation andconsumer goods production. The crisis of 1990-s led to the drastic reduction of the state support for science. Many Russian scientists and university graduates left Russia for Europe or United States; this migration is known as abrain drain. In 2000-s, on the wave of a new economic boom, the situation in the Russian science and technology has improved, and the government launched a campaign aimed into modernisation and innovation. Russia's President Dmitry Medvedev formulated top 5 priorities for the country's technological development: energy efficiency, IT (including both common products and the products combined with space technology), nuclear energy andpharmaceuticals. Some progress already has been achieved, with Russia's having nearly completed GLONASS, the only global satellite navigation system apart from American GPS, and Russia's being the only country constructing mobile nuclear plants.
The total area of cultivated land in Russia was estimated as 1,237,294 sq km in 2005, the fourth largest in the world. Unlike most other countries, Russia has large reserves of unused arable land, in part due to the drop in agricultural production during the economy crisis of 1990s, when the area planted to grains dropped by 25%. This was accompanied by a severe decline of livestock inventories. In 1999-2009, however, Russia's agriculture demonstrated steady growth, and the country turned from a grain importer to the third largest grain exporter after EU and U. S. in 2009. The production of meat has grown from 6,813,000 tonnes in 1999 to 9,331,000 tonnes in 2008, and continues to grow. This restoration of agriculture was supported by successful farm credit policy of the government, helping both individual farmers and large privatized corporate farms, that once were Soviet kolkhozes and still own the significant share of agricultural land in Russia. While large individual farms and corporate farms concentrate mainly on the production of grain (including for export), as well as husbandry products, small private household plots produce most of the country's yield of potatoes, vegetables and fruits.
The economic crisis that struck all post-Soviet countries in the 1990s was nearly twice as intense as the Great Depression in the countries of Western Europe and the United States in the 1930s. Even before the financial crisis of 1998, Russia's GDP was half of what it had been in the early 1990s. Since the turn of the century, rising oil prices, increased foreign investment, higher domestic consumption and greater political stability have bolstered economic growth in Russia. The country ended 2007 with its ninth straight year of growth, averaging 7% annually since 1998. In 2007, Russia's GDP was $2.076 trillion (est. PPP), the 6th largest in the world, with GDP growing 8.1% from the previous year. Growth was primarily driven by non-traded services and goods for the domestic market, as opposed to oil or mineral extraction and exports. The average salary in Russia was $640 per month in early 2008, up from $80 in 2000. Approximately 14% of Russians lived below the national poverty line in 2007, significantly down from 40% in 1998 at the worst of the post-Soviet collapse.Unemployment in Russia was at 6% in 2007, down from about 12.4% in 1999. Oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad.Since 2003, however, exports of natural resources started decreasing in economic importance as the internal market strengthened considerably. Despite higher energy prices, oil and gas only contribute to 5.7% of Russia's GDP and the government predicts this will drop to 3.7% by 2011. Russia is also considered well ahead of most other resource-rich countries in its economic development, with a long tradition of education, science, and industry. The country has more higher education graduates than any other country in Europe. A simpler, more streamlined tax code adopted in 2001 reduced the tax burden on people, and dramatically increased state revenue. Russia has a flat personal income tax rate of 13 percent. This ranks it as the country with the second most attractive personal tax system for single managers in the world after the United Arab Emirates. The federal budget has run surpluses since 2001 and ended 2007 with a surplus of 6% of GDP. Over the past several years, Russia has used oil revenues from its Stabilization Fund of the Russian Federation to prepay most of its formerly massive debts, leaving it with one of the lowest foreign debts among major economies. Oil export earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to $597.3 billion on 1 August 2008, the third largest reserves in the world. The economic development of the country though has been uneven geographically with the Moscow region contributing a disproportionately high amount of the country's GDP. Much of Russia, especially indigenous and rural communities in Siberia, lags significantly behind. Nevertheless, the middle class has grown from just 8 million persons in 2000 to 55 million persons in 2006. Over the last five years, fixed capital investments have averaged real gains greater than 10% per year and personal incomes have achieved real gains more than 12% per year. Despite the country's strong economic performance since 1999, however, the World Bank lists several challenges facing the Russian economy including its diversification, encouraging the growth of small and medium enterprises, building human capital and improving corporate governance. Another problem is modernisation of infrastructure, ageing and inadequate after years of being neglected; the government has said $1 trillion will be invested in development of infrastructure by 2020.
