russia 90s
As the 2018 football World Cup in Russia draws to a close, many of her foreign visitors were surprised to encounter in Russia an affluent society and a friendly, welcoming host. This makes it difficult to appreciate that only a generation ago, Russia experienced a political, economic and social collapse of calamitous proportions. After the Soviet Union disintegrated in 1991, Russia embarked upon a transition from communism to capitalism. The so-called "shock therapy" program, prescribed and guided by western experts, resulted in the longest and one of the most severe economic depressions in the 20th century. Today, few people outside of the nations of former Soviet Union remember this dark episode. Fewer still understand it.

Even among the better informed intellectuals in the west, the failure of Russia's shock therapy transition is largely misunderstood and often attributed to some sinister flaw in Russian society - a flaw which spawned corruption and criminality of staggering proportions. In this toxic environment, the sweet fruits of western democracy and capitalism simply could not grow in spite of the generous benevolence of Russia's western friends and helpers.

In April of 2015, Washington Post's editorial board published an article informing its readers that in the 1990s, "thousands of Americans went to Russia hoping to help its people attain a better life. The American and Western effort over the last 25 years - to which the United States and Europe devoted billions of dollars - was aimed at helping Russia overcome the horrid legacy of Soviet communism, which left the country on its knees in 1991. ... The Americans," write Washington Post editors, "came for the best of reasons. ... a generous hand was extended to post-Soviet Russia, offering the best of Western values and know-how." (Hiatt 2015)

Yet in spite of abandoning the one-party communist totalitarianism and embracing parliamentary democracy and free market capitalism, and in spite of receiving "the best of Western values and know-how," Russia experienced a veritable tragedy as its economy sustained an economic collapse that was worse than the one during the World War II Nazi occupation. More than 70 million Russians fell into poverty while a quarter of them lived in what World Bank described as "desperate poverty." Suicide rates doubled, alcoholism and violent crime soared. During the first six years of reforms, nearly 170,000 people were murdered. Widespread malnutrition and an acute health crisis emerged, resulting in epidemics of curable diseases like measles and diphtheria. Rates of cancer, heart disease and tuberculosis also soared to highest levels for any industrialized country in the world. Life expectancy collapsed and abortions skyrocketed.

In all, during those years Russia's death rate increased by 60% to a level only experienced by countries at war. In total, Russia sustained between five and six million surplus deaths, corresponding to between 3.4% and 4% of her total population. For comparison, during World War II, the United Kingdom lost 0.94% of its population, France lost 1.35%, China lost 1.89% and the U.S. lost 0.32%. (Chossudovsky 2010)

In the forthcoming series of articles, excerpted from Chapter 3 of my recently re-published book, Grand Deception we'll take a detailed look at this historical episode. The book's earlier edition, titled The Killing of William Browder, had been "suppressed" last September after only 5 weeks on the market. But some people had the chance to read it and the book obtained 12 reader reviews: 11 five-star and one 4-star reviews (more recently, another reader added a three-star review).

I also received several e-mails from Russian readers. One, who used to work in Russian government, confirmed that he was involved and privy to a number of events I describe and that things happened as I described. Another reader, a high level executive at Gazprom, wrote that "your narrative of Russia's economic collapse and subsequent looting is the best I have ever read. It surely is worthy of a very wide audience."

The excerpt I'm about to share is a rather long story - some 15,000 words long, so I've divided it in six parts, covering the following topics:
  • The transition: How Russia's transition from communism to capitalism happened and who were the main actors and beneficiaries in the process
  • The pushback: Russian lawmakers' attempt to push back against the lawless plunder and Boris Yeltsin's violent crackdown (with approval and support from Western governments), sending 5,000 troops with tanks and helicopters to crush the lawmakers' revolt, killing many hundreds of people
  • The role of western institutions: IMF's deliberate strangulation of Russia's economy, resulting in an "economic genocide."
  • The roots of U.S. deep state involvement: The preparations for this assault on Russia (USSR, rather) by the deep state elements of the US government already during the first days of the Ronald Reagan administration. The British government was likely involved and complicit.
  • The fallout: the making of the worst peacetime humanitarian catastrophe in modern history.
  • The alternatives to shock therapy: methods of transition were studied and prepared by many Russian economists, and they were partially implemented in Russia. Unfortunately these reforms were pushed aside by Yeltsin's government which was following the precepts of its western advisors.
grand deception krainer
Alex Krainer is a hedge fund manager and author. His book, banned by Amazon in September 2017 is now available in pdf, kindle, and epub formats at the following link "Grand Deception: Truth About Bill Browder, the Magnitsky Act and Anti-Russian Sanctions." Paperback version is now available here (and on Amazon). EU-based readers can purchase it hereAlex also wrote one book on commodities trading.
Originally published on Krainer's blog, The Naked Hedgie.