1990s: Back to the USSR?

Russia’s economy looks increasingly like the old Soviet model it replaced, but it is actually more flexible

The World Today Updated 4 January 2021 Published 12 June 2015 3 minute READ

Petr Aven

Former president of Alfa-Bank and served as Minister of Foreign Economic Relations of the Russian Federation 1991–1992

At the beginning of the 1990s the Soviet economy was in crisis. Although GDP growth started slowing as far back as the mid-1960s, it was not until the late 1980s that it fell to zero before turning negative (-4.9 per cent) in 1990. By the autumn of 1991 the larger cities were facing a real threat of famine while the state was on the brink of bankruptcy.

It took such a desperate plight to force the country’s leadership into undertaking a genuine transformation of its economic model and, eventually, its political system. Under the guidance of Yegor Gaidar, architect of Russia’s market reforms, the planned economy, with its centrally crafted production plans, regulated prices, non-convertible currency, foreign trade monopoly and almost total government ownership, was abandoned.

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