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What’s await­ing Rus­sia may be much worse than the chaos of 1990s

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09.03.2022

Today, Russia appears to be on the verge of an economic collapse without parallel in its post-World War II history. The United States and European Union’s decision to sanction Russia’s central bank on February 28 has essentially severed the spinal cord of the country’s economy. Russia is set to default on its debts, see its oil export relationships rejuggled to its detriment, its currency collapse even further, and it is now possible that most of its residents’ quality of life may fall to Iranian or potentially even Venezuelan standards in the near future.

President Vladimir Putin has long justified his strongman rule through warnings that without his guiding hand, Russia would be destined to fall back into the chaos of the 1990s when Russians experienced a drastic decline in living standards and a major contraction in the economy on the back of the Soviet Union’s collapse. Yet the reality is that his invasion of Ukraine has made possible a collapse worse than anything that Russia experienced in the 1990s.

The 1991 collapse of the Soviet economy and the birth of the new Russian economy saw huge amounts of wealth smuggled abroad, the collapse of the political-economic structure on which the Soviet Union depended and its replacement with a class of mostly violent criminals, well-connected former apparatchiks and the occasional idealistic capitalists who would come to be known as “oligarchs”. Russian life expectancies collapsed.

Yet together with Western credits, something coveted by both the last Soviet leader Mikhail Gorbachev and the first Russian Federation President Boris Yeltsin, Russia was able to begin building a capitalist market structure. The “shock therapy” applied to achieve this, however, has been widely discredited for further empowering the oligarchic class and leaving average citizens to carry the cost. It was also responsible, at least in part, for the next economic disaster that devastated Russia just seven years later, in 1998.

While Russia’s 1998 default was partially driven........

© Al Jazeera


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