Russian Federation | Nation of Braveness

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.