Leonid Grigoriev is President of the Institute for Energy and Finance. Marsel Salikhov is an expert of the Institute for Energy and Finance.
Fifteen new states emerged in the post-Soviet area after the break up of the Soviet Union and the achievement of independendence in 1991. Since then their development has been largely influenced by both political and economic factors. Political factors often determined the economic progress, as key decisions concerning market reform were made by the political elites. As a result, political processes had a critical effect on the legal and economic environment in the FSU during the transition period.
All of the former Soviet states were challenged by a "triple transition:" politically - from a Soviet state to a democracy; economically - from a planned economy to a market economy; and structurally - from a republic as part of a large country to an independent state.
The difficulties of this transition were enormous, even if they were not aggravated by internal conflicts.
THE TRANSITION CRISIS
All FSU countries were confronted with the pressing need of creating complex mechanisms of regulatory rules, property rights and corporate governance - formidable tasks for the new elites. Within a brief time span (1991-1993), several destructive processes occurred simultaneously: the rupture of "old planned" links between business enterprises, which came as a second shock after the disintegration of the Council for Mutual Economic Assistance (CMEA, also known as Comecon) a year before. Furthermore, there was an acute budgetary crisis: Russian budget deficit in 1992 was close to 43 percent of the GDP, accompanied by a CPI surge at 40 times a year. In the other newly independent states the picture was similar. The economic crisis was accompanied by hyperinflation, chaos, and the confusion and disorientation of economic managers whose lack of vision forced them to establish control over enterprises out of self-interest and the logic of survival. Against this backdrop, and with passions running high over the issue of independence and the formation of new political elites, armed conflicts broke out in several countries. It was at this time that the first refugees and labor migrants began to appear.
13.10.2006
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