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HIST 1500
William M.Last

Russia  Jihad vs. McWorld – Benjamin Barber  Friedman is in the middle of the globalization argument, not taking sides.  Oligarchy –  Perestroika aimed to break the hold of the oligarchy on the economy and the political system.  Boris Yeltsin succeeded Gorbachev as the president of Russia in 1991.  Yeltsin was popular with the people.  However, Yeltsin didn’t have a clue about economics.  By 1992, things had gotten bad. 20% inflation and 10% unemployment.  The government rationed many commodities but eventually gave up on some of that because there wasn’t enough of anything.  Igor Gaidar – prime minister under Yeltsin  Anatole Chubais – fairly young Russian government official that wanted to cut government spending.  Government spending was cut and they started to ease price controls, which only made things worse.  Russia was in a depression.  Yeltsin and Chubais turn to the US and Japan.  Some Harvard economists went over to Russia to advise Yeltsin. They told him they needed to make the immediate transition to capitalism.  Jan 1992, Russia took all price controls off, and took the government out of certain industries.  Yeltsin needed financing and the media to say nice things about him. He turned to the oligarchs (nomenklatura). Yeltsin wanted their support in exchange for some state industries.  Overnight, these big empires started showing up (oil, media, banking, etc).  By 1995, these oligarchs were more powerful and rich than the government.  In 1997, an Asian currency crisis started to depress commerce and markets. It hit the oligarchs hard. Gas and oil became really cheap here in the US and in western Europe. Many of these oligarchs’ wealth was tied up in commodity exports from Russia so they were losing money.  They pressured the govt to issue bonds to improve their state industries. They used repo notes (repurchase agreements). These notes were becoming due and they didn’t have the money to pay them. This sent the Russian economy into a crisis.  They cut government
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