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May 13, 2013

Aim: How did Russia and the former East Bloc countries meet the challenges of post-communist Reconstruction and political/economic reform?. May 13, 2013. Economic Change Soviet Union falls in 1991; communism ended in former Soviet republics

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May 13, 2013

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  1. Aim: How did Russia and the former East Bloc countries meet the challenges of post-communist Reconstruction and political/economic reform? May 13, 2013

  2. Economic Change • Soviet Union falls in 1991; communism ended in former Soviet republics • In largest republic, Russia, Boris Yeltsin (president from 1991-2000) began a campaign to alter economy’s basic structure • Goal to make economy function like capitalist system. He launches an aggressive program of shock therapy (privatize the market, free prices on 90 percent of Russian goods, turn thousands of factories and mines over to private companies).

  3. Mixed Results Early results of Russia’s reforms mixed • Public monopolies of the Soviet era are transformed into privatized businesses (usually still in the hands of the managers and government officials of the communist era). They cut production and raise prices to boost profits. • A small capitalist elite acquire wealth and power under this system, while most ordinary Russians do not: • By 1996, 5 percent of Russia’s population controlled 80 percent of its capital resources • Many Russians could not afford to buys goods in stores. Inflation wiped away the life savings of many. A growing number fell into poverty, and life expectancy for men dropped by eleven years. • Some questioned benefits of market reform, Yeltsin is ineffective in dealing with these problems.

  4. Russian Revival Under Putin • Vladimir Putin replaces Yeltsin as president in 2000. Putin maintains relatively free markets, but re-establishes semi-authoritarian political rule to control corruption and chaos in the economy. Under Putin’s leadership, Russia’s economy expands until the global financial crisis of 2008. • Putin supports anti-Western Russian nationalism, limits political opposition, cracks down on the independent media. • Ongoing conflict with Chechnya (a tiny republic of 1 million Muslims on Russia’s southern border seeking its independence). Thousands on both sides have lost their lives and committed human rights abuses.

  5. Change in Eastern Europe • Czechoslovakia breaks into the Czech Republic and Slovakia due to the nationalist demands of the Slovakians (“Velvet divorce”) in 1993. • Poland, Czech Republic and Hungary are the most successful of the Eastern European countries in embracing capitalism and achieving economic growth (Poland created twice as many new businesses as Russia in the early 1990s). They also have effective political leadership (Lech Walesa, Vaclav Havel) and embrace civic institutions and independent media outlets that create genuine political freedom. In 1997, they join NATO, and in 2004 they join the EU. • Romania and Bulgaria make greater economic progress after 2000, join NATO in 2004, and the EU in 2007. • Economic challenges still remain: Gap between the rich and the poor has increased, old industrial centers have declined. Some feel Ostalgie(nostalgia for the lifestyle and culture of the vanished East Bloc).

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