penness) and perestroika (restructuring) in an attempt to end the period of economic stagnation in the country and democratise the government. However, this led to the rise of strong nationalist and separatist movements. Prior to 1991, the Soviet economy was the second largest in the world, but during its last years it was afflicted by shortages of goods in grocery stores, huge budget deficits, and explosive growth in money supply leading to inflation.
By 1991, economic and political turmoil were beginning to boil over, as the Baltic republics chose to secede from the Union. On 17 March, a referendum was held, to which the vast majority of participating citizens voted in favour of preserving the Soviet Union as a renewed federation. In August 1991, a coup d'état attempt by members of Gorbachev's government, directed against Gorbachev and aimed at preserving the Soviet Union, instead led to the end of the Communist Party of the Soviet Union. Despite the will expressed by the people, on 25 December 1991, the USSR was dissolved into 15 post-Soviet states.
Russian Federation
Boris Yeltsin was elected the President of Russia in June 1991, in the first direct presidential election in Russian history. During and after the Soviet disintegration, wide-ranging reforms including privatization and market and trade liberalization were being undertaken, including the radical changes along the lines of "shock therapy" as recommended by the United States and International Monetary Fund. All this resulted in a major economic crisis, characterized by 50% decline of both GDP and industrial output between 1990–95.
The privatization largely shifted control of enterprises from state agencies to individuals with inside connections in the government system. Many of the newly rich businesspeople took billions in cash and assets outside of the country in an enormous capital flight. The depression of state and economy led to the collapse of social
