from state socialism to capitalism required enormous financial
resources. Gaidar’s team hoped that the West, which so
enthusiastically hailed the end of communism in Russia and its plan
to switch to a market economy, would provide massive financial
assistance for Russian reforms. This, however, did not happen on the
scale expected by the reformist government. There was no other
choice but to drastically cut social expenditures.
As a result,
the fairly comprehensive system of social protection put in place
during the Soviet period was severely crippled. Tight budgetary
constraints did not provide adequate social security for the growing
army of the unemployed and poor. Chronic underfunding affected such
vital areas as national health care, education, and culture, posing
a serious threat to the stability of Russian society.
hopes on Western aid, Russian reformers lost sight of the brutal
fact that global integration and the international division of labor
do not cancel competition between countries and economic blocs. The
prospect of the emergence of a new powerful rival in the east of
Europe and Asia did not necessarily delight Western politicians and
business leaders. The Russian government dismantled most of the
trade barriers that prevented Western goods from entering the
Russian market. As a result, Western companies rapidly established
footholds in Russia and in a few years, through their greater
efficiency and competitiveness, practically put out of business
entire branches of domestic industry, such as the textile industry.
under the crushing burden of accumulated foreign debt, including the
Soviet debt honored by the post-Communist government, Russia found
itself in a situation where its very economic independence was at
stake. The inability to compete on equal economic terms with the
West threatened to relegate the former superpower to the status of a
raw materials supplier for Western transnational corporations.