It was supposed to be the greatest transition of modern times.
Practically overnight, a dirty, inefficient, and unjust system that encompassed 11 time zones was to undergo an extreme makeover. Billions of dollars were available to speed the process. A new crew of transition experts came up with the blueprint and the public was overwhelmingly on board. Best of all, this great leap forward would serve as a model for all countries desperate to exit a failed status quo.
When the Soviet Union collapsed in 1991 and Russia emerged from its wreckage as the largest successor state, government officials in the newly elected administration of Boris Yeltsin teamed up with a cadre of foreign experts to chart a path into a post-Soviet system of democracy and free markets. The West offered billions of dollars in loans while the Russians generated more funds through the privatization of state assets. With all those resources, Russia could have become an enormous Sweden of the east.
Instead, much of that wealth disappeared into the pockets of newly minted oligarchs. During the 1990s, Russia suffered an economic catastrophe, with the equivalent of $20 to $25 billion leaving the country every year and the gross domestic product (GDP) falling nearly 40 percent between 1991 and 1998. The Soviet Union once had the second largest economy on earth. Today, thanks only to a reliance on Soviet-era fossil-fuel and arms-export industries, Russia hovers just outside the top 10 in total economic output, ranking below Italy and India, but still manages only 78th place—that is, below Romania —in per-capita GDP.
The failures of the Russian transition can be chalked up to the collapse of empire, decades of economic decay, the vengeful triumphalism of the West, the unchecked venality of local opportunists, or all of the above. It would be a mistake, however, to dismiss such a cautionary tale as a mere historic peculiarity.