NARRATOR: For decades, Russia
was the center
of a global communist powerhouse
until, almost overnight,
it fully embraced capitalism.
COMMERCIAL NARRATOR:
[speaking russian]
NARRATOR: By the
1980s, the Soviet
Union was experiencing a period
of increased economic distress.
Corruption and a
lack of a free market
were crippling a country that
had been under communist rule
for the last 60-plus years.
General secretary of the
Communist Party Mikhail
Gorbachev advocated
for two new initiatives
to modernize the Soviet Union.
Glasnost, an increase in
bureaucratic transparency,
also allowed citizens to
voice their opposition
against the government
more freely.
Perestroika, a
restructuring of the USSR's
political and economic
systems, freed
up some government control of
pricing and state monopolies.
While these unfolded, Boris
Yeltsin, an anticorruption
crusader and a former
Gorbachev ally,
emerged as Gorbachev's
chief critic.
BORIS YELTSIN:
[speaking russian]
NARRATOR: Glasnost
and perestroika
proved to be too much change
in a too short amount of time
for the precarious nation.
Gorbachev resigned on
Christmas Day, 1991,
handing over the
reins to Yeltsin.
The Soviet Union formally
dissolved the following day.
At the behest of
Western advisors,
Yeltsin quickly
imposed a variety
of policies meant to
dramatically shift
Russia towards capitalism.
This shock therapy,
as it became known,
deregulated the prices of
goods, opened up the country
to imports, and privatized many
industries that had once been
controlled by the government.
However, these efforts fared
even worse than Gorbachev's.
[speaking russian]
INTERPRETER: The
government's to blame,
and so we have to stand
here selling our clothes.
NARRATOR: Hyperinflation
took hold.
The value of the
ruble plummeted.
Unemployment doubled, and
industrial output was halved.
But it was the
hasty privatization
of formerly state-held
corporations
that had the longest-lasting
negative consequences.
The government offered
the public vouchers
to buy shares in
these companies,
but they were mostly snatched
up by wealthy Russians
with mountains of cash.
This gave rise to
a new oligarchy,
a handful of tycoons
that controlled
Russia's most important
industries and a large portion
of its wealth.
The seven most powerful
of these oligarchs
became known as the
[russian] or seven bankers.
They claimed to have direct
influence over the highest
levels of politics, including
Yeltsin himself, while also
controlling the majority
of Russia's banks,
oil, gas, mining,
and media operations.
Corruption and organized crime
were allowed to proliferate,
and Yeltsin's tenure was
riddled with the very problems
he had promised to remove.
By 1998, the Russian government
was failing to repay its loans,
sometimes to the very
oligarchs running
the government in the shadows.
All of this turmoil
significantly
eroded the public's faith
in their new government.
The Russian people yearned
for a strong leader
to take them into
the 21st century.
Now Boris Yeltsin who
succeeded in making history
yet again by being the first
ever Russian leader to step
down voluntarily
rather than die or be
forcibly removed from office.
NARRATOR: When he resigned
on New Year's Eve, 1999,
Boris Yeltsin named his prime
minister, Vladimir Putin,
as acting president.
Putin has been Russia's
leader ever since,
through four presidential
terms with a return
to the office of prime
minister in between.
At first, Putin instituted
liberal policies
that pushed the
country even further
towards free-market capitalism.
He built up Russia's
cash and gold reserves,
introduced a flat-rate income
tax, lowered business taxes,
and reduced regulation.
The life of the average Russian
finally began to improve,
and Russia's GDP reversed
its downward trend.
But Putin's free market
wasn't truly free.
It was a hybrid approach that
combined the Soviet-era idea
of state-owned corporations
with the oligarchy
that took shape
under Yeltsin, what
many called crony capitalism.
The Russian government began
to retake control in industries
it had privatized less
than 15 years earlier--
energy, media,
banking, aviation,
and construction, among others.
Putin pushed out many of the
oligarchs that had prospered
under Yeltsin, handing control
of these new, partially
state-controlled corporations to
a new generation of oligarchs,
his own inner circle
of former KGB officials
and political boosters who
helped Putin's rise to power.
He allowed these
oligarchs to thrive
under a grand bargain of sorts.
The oligarchs could
retain their wealth
as long as they
supported Putin's
increasingly authoritarian grip
over the Russian government.
A few oligarchs have fallen
out of favor with Putin,
forcing them to flee
into exile and resulting
in several suspicious deaths.
MAN: The family is still
suspicious of the view
that Mr. Berezovsky
took his own life.
NARRATOR: Today, the
majority of Russia's economy
is controlled by
state corporations,
which are in turn controlled
by this class of oligarchs.
But the country's
economic performance
has been a mixed bag.
The economy is overly reliant
on volatile oil and gas exports.
Blatant corruption permeates
every level of government,
and sanctions are
always a threat
due to Vladimir
Putin's aggressive
and sometimes illegal
geopolitical activities.
Putin's capitalism largely
benefits the Russian people,
but it has definitely
worked out very
well for the hand-selected few.
