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.