A Study of Russia and the Opportunities it Offers Foreign Investors: Bleak Statistics, Bleak Politics

Russia has experienced two momentous revolutions during the twentieth century. The overthrow of the czar in 1917 began the first. After a brief attempt at democratic rule, Lenin\u27s Bolshevik Communists seized power in 1918 and established a totalitarian government, naming the remade Russian empire as the Union of Soviet Socialist Republics. The seeds of the second revolution were sown with the elevation in 1985 of the reform minded Mikhail Gorbachev to the leadership of the Soviet Communist Party. His reforms, including perestroika (restructuring) and glasnost (openness, including limited democracy) unleashed strong forces within the Soviet Union. The revolution that Gorbachev\u27s reforms promoted-or at least contributed to-reached a crisis stage in 1991. The old guard communist party leaders, whose positions of power were being threatened by both perestroika and the demands of many of the Soviet Union\u27s constituent republics for greater autonomy, staged a coup against Gorbachev on August 18. The coup collapsed within days, however, in part because hundreds of thousands of Soviet citizens took to the streets to rally against it. Boris Yeltsin, the president of Russia (then a Soviet republic), was the most visible symbol of democratic defiance of the old guard. In the aftermath of the crisis, the already weak Soviet state lapsed into a terminal coma. Central authority dissipated. Real power shifted rapidly to Yeltsin\u27s office in the Russian White House and to the other 14 republics, which moved rapidly toward independence. On December 25, 1991 the Soviet flag was lowered for last time from atop the Kremlin and the Russian flag was raised in its stead. Of the former Soviet republics (FSU\u27s), Russia is by far the largest, and the most powerful. Russia has retained all the Soviets Union\u27s tactical nuclear weapons and the vast majority of its strategic-range nuclear weapons. These factors make the course of Russia a matter of great concern for the world. It is the purpose of this paper to explore the history of the reform process, the current political and economic situation in Russia, the process in establishing free market mechanisms and the realities in opportunity for foreign direct investment in Russia