 map Russia The USSR had a totalitarian political system in which Communist Party leaders held political and economic power. The state owned all companies and land, and the government controlled most aspects of the economy. After the Soviet Union broke apart in 1991, Russia began transforming itself into a more democratic society with an economy based on market mechanisms and principles. For many Russians the transformation brought a severe decline in standard of living. At the same time, Russia became more integrated with the global economy and benefited from improved relations with the countries of the European Union as well as its neighbors in Asia.
Russian economy
The Soviet Union had a planned socialist economy, in which the central government controlled everything from production targets and prices to distribution. The Soviet satellite states in Eastern Europe had planned economies as well. After the breakup of the USSR, Russian reformers were confronted with the daunting task of building a modern capitalist economy while simultaneously striving to create a democratic state based on effective laws and reliable administrative structures. The collapse of communism in Eastern Europe in the late 1980s and the dissolution of the Soviet Union at the end of 1991 disrupted the close economic relations Russia had previously enjoyed with neighboring communist states and other Soviet republics. Political turmoil and uncertainty inside the Russian government also contributed to the country's economic woes. Compared with most of the former planned economies of Eastern Europe, Russia experienced a severe and protracted drop in officially reported economic output.
In 1992 the new Russian government led by President Boris Yeltsin launched a comprehensive program to create a market economy. In the mid-1990s, after several years of runaway inflation, the economy began to stabilize. Inflation fell to manageable levels and the exchange rate of the Russian currency (the ruble) stabilized. Nonetheless, severe structural imbalances persisted, and the introduction of market competition continued to encounter stiff resistance from the ranks of conservative politicians and industrial managers. Many unprofitable state-owned enterprises remained open, in part by simply not paying employees, suppliers, and taxes. Federal and regional governments allowed tax arrears to accumulate, even while government spending continued to outpace revenue generation. Meanwhile, a new class of well-connected business tycoons, commonly known as "oligarchs," exploited the reform process to promote their own narrow interests. Their manipulation of the privatization of industry and the banking sector contributed to the country's budget deficits and the spread of corruption.
In late 1997 the national economy began to feel the effects of an international financial crisis in Asia, and the following August Russia experienced its own financial crisis. Alarmed by the Asian meltdown and the growing imbalances in Russia's public finances, many foreign investors withdrew from the Russian market. The flight of foreign capital forced Russia's Central Bank to devalue the ruble and to default on foreign and domestic debts. The crisis rocked the Russian stock market and plunged the living standards of ordinary Russians to new lows.
 Map Chernobyl All of these factors combined to bring an impressive economic recovery that exceeded the expectations of most Western economists. Russia's gross domestic product (GDP) grew an average of 6.7 percent annually from 1999 to 2003. Public finances also improved dramatically. From 1996 through 1999 the government's annual budget deficit averaged 6 percent of GDP, but from 2000 through 2003 the government budget generated a surplus averaging 2 percent of GDP.
However, it remains unclear whether Russia can sustain a high rate of economic growth over the long term. Skeptics have emphasized the country's heavy reliance on oil exports and its vulnerability to oil price swings. They have also pointed to signs of mounting government hostility toward private business and the persistence of corruption under President Putin. On the other hand, the government has sought to address the problem of long-term sustainability. In addition to strengthening the fiscal system, it set up a stabilization fund in 2004 to save revenue generated during periods of high oil prices as a cushion against lean periods of low prices. How effective these measures will be in practice remains to be seen.
According to the International Bank for Reconstruction and Development (World Bank), Russia's GDP in 2004 totaled $581.4 billion. Services, including the banking sector, accounted for 60 percent of the GDP. Industry, which includes manufacturing, mining, electricity generation, and construction, accounted for 35 percent, and the agricultural sector, including forestry and fishing, contributed 5 percent. Adjusting official data to take account of the peculiarities of Russian energy prices, the Organization for Economic Cooperation and Development (OECD) estimates that the service sector generates about 46 percent and industry about 41 percent of GDP.
Chernobyl is an abandoned city in northern Ukraine, in the Kiev Oblast (province) near the border with Belarus. The city was abandoned in 1986 due to the Chernobyl disaster at the Chernobyl Nuclear Power Plant, which is located 14.5 kilometers (9 miles) north-northwest. The power plant had been named after the city, and was located in Chernobyl Raion (district), but the city and the plant were not directly connected. At the time of power plant construction a twin city of the plant, Prypiat was built for power plant workers. Even though the city is basically uninhabited, a few people still live there. The occupied houses are not so distinguishable from the rest, and there are texts on them stating that the "Owner of this house lives here". Also, workers on watch and administrative personnel of the zone of alienation are stationed in the city on term basis. Before the accident, the city was inhabited by 14,000 residents.
The city name comes from a combination of chornyi (ÑоÑний, black) and byllia; hence it literally means black grass or black stalks. The reason for this name is not known. Different explanations have appeared after the 1986 nuclear accident, which represent attempts to link the accident to prophesies in the Book of Revelation in the Christian New Testament. For these, see Chernobyl in the popular consciousness.
Chernobyl was a crown village of the Grand Duchy of Lithuania in the 13th century CE, in Kievan territory that is now a part of Ukraine. It was granted as a fiefdom to Filon Kmita, a captain of the royal calvary, in 1566. The province containing Chernobyl was transferred to the Kingdom of Poland in 1569, and then annexed by the Russian Empire in 1793. Prior to the 20th century Chernobyl was inhabited by Ruthenian and Polish peasants, and a large Jewish community. In World War I the village was occupied by Germans, and during the civil wars of 1917-20 it was occupied first by the Polish Army and then by the Red (i.e. Bolshevik) Cavalry. In 1921 Chernobyl became a part of the newly-formed Ukrainian SSR. During the period 1929-33 Chernobyl suffered greatly from mass killings during Stalin's collectivization campaign, and in the Holodomor (famine) that followed. The Polish community of Chernobyl was deported to Kazakhstan in 1936, many dying of starvation along the way. The Jewish community was exterminated during the German occupation of 1941-44.With the collapse of the Soviet Union in 1991, Chernobyl became part of Ukraine, an independent nation.
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