Russia had every chance to reinvent itself as a thriving democracy after the Soviet Union collapsed—so how did it end up sliding back into dictatorship instead? Who truly benefited from this tragic reversal, and why did the Russian people accept authoritarianism after decades of struggle?

Today I’m taking you inside the hidden story of greed, power struggles, and missed opportunities that shaped Russia’s transformation into an aggressive authoritarian state.

How We Viewed Democracy

The history of the Soviet collapse is perceived very differently in Russia than in the West. For Europe and North America, the fall of the Berlin Wall was a monumental event. In the USSR, however, the vast majority of people didn’t even notice it. They had no idea what it was about. The history of Europe in the USSR was poorly taught since Europe was as distant and inaccessible as Mars. It was happening far away, and it didn’t affect everyday life.

Most people had little understanding of real democracy. We were taught that democracy existed in the USSR. Soviet ideology was built on the idea that we had a people’s government, while in the West, the capitalists were in control.

No one understood the meaning of the term, and this was true for both the elites and the general public. As a result, it was unclear what exactly needed to be built and how.

The foundation of democracy is the ability to act collectively, belief in common ideals, and physical resources—free time, energy, and money. In the late 20th century, none of this existed in Russia.
Collective action is learned over generations in town halls and church communities. However, the Soviet government deliberately destroyed any form of societal self-organization.

There were no shared ideals either. During the 70 years of Soviet rule, which shaped the lives of four generations, the state hammered a political ideology into people’s minds that had no practical application. They would chant, “Glory to the Communist Party!”

Okay.

“All power in the Soviet Union belongs to the workers and peasants!”

But everyone knew that wasn’t true, as none of the workers or peasants had any real power.

They proclaimed, “The teachings of Marx and Lenin will live forever!” and people nodded, but few actually understood what that even meant.

As a result, people tended to view philosophy, ideology, and politics as false and harmful to them personally. The party officials may have been fighting for power, but people knew it didn’t concern them.

Of course, there were educated people in Russia who understood why democracy, a system of checks and balances, and a change in leadership were important. But these people had no resources. In the 1990s, we were experiencing our own Great Depression.

Most educated people had no money, no access to the media, and the internet was seen as a luxury for the ultra-wealthy. Access to TV and radio was a privilege, not easily granted. To be heard, you either had to pay, be connected to the right people, or be useful to someone in power. This system was known as “blat”—I have a separate video explaining it.

Here is an example:

The principal at the school I attended was an educated, forward-thinking person. She proposed introducing democracy into our school. She said that from now on, everything would be different, and teachers would listen to students and parents. We held elections, some people joined the school council, and… nothing changed.

We all knew what our problems were and desperately wished someone would start addressing them. But it was impossible to solve them because neither the school nor we had the money or the authority to do so.

We would have voted to fire the cruel and unfair English teacher. But she was a close friend of the principal. We wanted new, modern computers, but instead, we had an outdated, creaky monster in the computer lab with a black-and-white screen. And no one was allowed near it because the principal feared we would break it.

The same thing was happening on every level. The economy was falling apart, there was no money for anything, and people couldn’t even chip in for what they needed. There was nothing to chip in with, as wages were tiny and often delayed or unpaid.

As a result, all discussions about democracy only caused irritation. Since those days, the very word “democracy” became associated with meaningless chatter. Those who insisted on democracy were considered almost mad, like those proposing to build a utopia that couldn’t possibly exist.

Back then, people didn’t dream of fair elections or public discussions on important issues—they dreamed of quick results. The problems were endless, and it seemed like only a strong, fearless leader could solve them—someone who would crack down on corrupt officials and criminals.

The People in Power

Who held power during those years? Who could really influence the situation?

It was the people with resources, acquired through various circumstances.

First, there was the old party nomenklatura. By the 1980s, it was already clear that socialism wasn’t working and that the USSR was falling far behind the West in almost every area, except for weaponry, space, sports, and ballet. The party elite had no intention of stepping aside, but they also wanted change. They wanted to preserve their power and trade in their black Volgas for BMWs. All of their future activities were aimed at achieving this, and as we can see, they succeeded. If we read the biographies of key officials in modern Russia, we’ll see that the vast majority of them come from the old party nomenklatura. In a sense, they form the new Russian nobility, desperately holding onto their privileges.

Secondly, there was the criminal world. It was highly developed, diverse, and well-organized.

The third force in this equation was the siloviki—this term refers to the KGB, police, border guards, military, and prison system workers. Their power stemmed from brute physical force, as well as their ability to monitor and gather crucial information on everyone.

After the collapse of the USSR, this social group lost many of its privileges because it was funded by the state budget, and the state had no money. In the past, a career in the military was a clear social elevator, but by the late 1980s, being a Soviet officer was no longer prestigious. It meant chronic poverty and a life in some remote, forgotten town. Only those who helped young men evade mandatory military service made good money.

For police officers, investigators, and prison guards, prosperity depended on their proximity to the leadership and the capital city. It was one thing to be a rural policeman or a guard at a Siberian prison camp, and another to work in the Moscow prosecutor’s office. One thing was investigating a case involving two drunks fighting over a woman, and another was dealing with large-scale embezzlement or threatening someone with an investigation into such crimes.

The same was true for border guards and customs officers. It was one thing to control the flow of used Japanese cars or office supplies from Finland, and quite another to serve on the border with Mongolia.
The political police—formerly all-powerful KGB agents—didn’t know what to do with themselves.

Throughout Soviet history, their work had revolved around fighting freedom of speech, religion, movement, and expression. But in the early 1990s, these issues became irrelevant. They had once been at the top of the food chain, the main predators everyone feared. But now what?

Former KGB officers became the link between the major clans because they had the necessary connections and access to data—who was making money, who had what, and who had what secrets.

The fourth force in the post-Soviet space was made up of famous people—journalists, artists, athletes, etc. People didn’t fully understand what was happening, so they instinctively listened to those who occupied high social positions, were well-known, and had the admiration of at least a portion of society. This resource was, and still is, highly valuable. Famous people didn’t always have money, but they could monetize their fame by supporting those who did.

The Redistribution of Property

So, what did these “remarkable” people start doing? Many of them drew the obvious conclusion: they were already part of the elite, and they wanted to remain so in the new regime. But for that, they needed money. So, they began dividing up the legacy of the USSR.

The situation was favorable for them. Two global processes were happening simultaneously: industrialization and globalization. In China, production was rapidly developing, which meant rising oil prices, while globalization, expressed in standardized logistics, communication, and the free flow of capital and goods, allowed the Russian elite to export anything they wanted from the country. The key was to seize whatever Soviet property remained untended. The main target was industrial enterprises in the extractive industries.

Had Russia not been so rich in resources, its fate would have been entirely different. It would have likely unfolded like Poland’s. The elite would have had to build democracy simply because it would ensure their security, stability, and wealth. But when oil and gas prices surged, an obvious shortcut appeared. There was no need to build anything. They simply had to “ride on the pipeline”—in other words, take control of the major financial flows.

A similar scenario occurred in several African countries after colonial powers withdrew. The Europeans left behind discovered deposits and infrastructure, but local rulers took control of them, and instead of building the nation’s prosperity, they focused on enriching their own clan—so they could eventually buy a house in London or Paris and spend their old age surrounded by unimaginable wealth.

In the 1990s, Russia underwent a massive redistribution of property. I lived through a time when ambitious young people, with the support of officials and siloviki, could seize entire factories, of course, sharing the spoils with those who mattered. It was like a gold rush, even more intense than California’s in 1849.

Another important point: in those years, Russia was fighting a war in Chechnya, and everyone who could make money from it did. The schemes were extraordinary. For example, the railway company didn’t have the money to repair some engines, but it could still transport goods. A factory supplying building materials to the Far East didn’t have the funds to pay the railway company, but it had promissory notes from a chemical plant that made fertilizers. Enter a “fixer” with strong connections, and voilà—building materials go to the Far East, raw materials for fertilizers head to Chechnya, and money from Chechnya comes back to pay the railway company.

Why would fertilizers be in war-torn Chechnya? Because the rebels used the raw materials to make explosives. Where did they get the money? Part from Muslim sponsors, part from trading with Russian officers, officials, and criminals. Mostly, it was drug trade and ransom for prisoners. The whole operation was overseen by Federal Security Service officers—the former KGB.

A new religious cult was quickly gaining ground in Russia—the cult of money. And in this environment, everything else became irrelevant. Ideology, any ideology, became insignificant. Money could protect you and your family, while abstract discussions of freedom, patriotism, and justice could not. So, everyone who could make money did. And these people grabbed the opportunity greedily, like a starving person grabbing food.

We must understand that in the USSR, there was no private wealth. The only exceptions were underground criminal lords, and even they could amass lots of money, but it meant little. What good is it to be crazy rich if you can’t freely spend your money? You couldn’t travel abroad, you couldn’t invest your money, you couldn’t get treatment where you wanted. An American engineer could buy a luxurious Rolls-Royce, while the richest people in Moscow couldn’t. In the USSR, no one could drive such cars. No one could build palaces. No one could send their children to study abroad.

And suddenly, all of that became possible.

The legislation at the time was a patchwork. Some laws were old Soviet ones, some were new, and some regulations didn’t exist at all. Clearly, people who had acquired Soviet enterprises and resources wanted their acquisitions to be secured permanently.

Now, let’s ask ourselves: what would have happened if Russia had become a democratic country—with fair courts, independent journalism, and a functioning parliament? The answer is clear—it wouldn’t have been good for these people.

They were only comfortable under a regime that guaranteed their impunity. Therefore, the choice was obvious: people with resources wanted someone from their own ranks—someone with the same values and ambitions—to lead the country. And they wanted him to stay in power as long as possible, to ensure that the status quo remained unchanged.

Why Did the Elite Support Dictatorship?

The first president of modern Russia, Boris Yeltsin, drank excessively and constantly made wild missteps. People were ashamed of him. If he had embarrassed himself quietly at home, no one would have noticed. But his disgrace was visible to foreigners. And we know that maintaining face is extremely important in Russia—it’s one of the most significant aspects of the national character.

It was clear that Yeltsin could no longer handle the position, and he needed to be replaced. But by whom? The new leader had to meet four criteria:

• guarantee the elite’s privileges;
• be decisive, yet also able to negotiate (with their own people, of course);
• share the beliefs and values of the elite;
• look presentable—both in the eyes of foreigners and ordinary people.

In the early two thousands, Vladimir Putin looked very presentable compared to the other Soviet-era leaders, who were often referred to as “old mushrooms.” He was in excellent physical shape, spoke German, and had a romantic profession—a secret service agent.

In Hollywood films, Soviet spies were depicted as soulless brutes. But in Soviet films, spies were portrayed as strong, manly, and caring men. This image aligned with the secret fantasies of older Soviet women, whose husbands couldn’t cope with the economic crisis. This was crucial when you needed to bring millions of people to the polling stations and get them to vote for a little-known candidate.

For a couple of decades, Vladimir Putin was acceptable to everyone: due to high oil prices, a flood of money came into Russia, and in general, people’s lives improved dramatically. In the 1990s, the average salary was $100 a month, but by 2020, many people earned several times more. People started buying apartments and cars, decent healthcare became more accessible, construction projects were everywhere, and major cities underwent a significant transformation.

Ordinary people were happy with the stable growth of their wealth, and the elites were content that Putin was successfully managing conflicts between clans and not interfering with their corruption schemes. This was crucial because corruption and embezzlement became the foundation of Russia’s economy and politics.

The Merging of Business, Power, and Crime

By the 1990s, a significant trend emerged: the merging of business, power, and crime. During the Soviet era, the criminal world had no access to state power. But by the time the USSR collapsed, organized crime had both significant wealth and armed individuals ready to solve problems by force. The criminal world began to take over existing businesses, bribing officials and seizing more and more real estate and manufacturing assets. Competing criminal groups often engaged in shootouts, and many gangsters moved into cemeteries permanently, receiving top-tier funerals.

But soon, it became clear that it was much more profitable to be an official and control government contracts or property. For example, if you were the mayor of a city, you could rent out a historical building to your mother-in-law for a nominal fee. For 50 years. Your son-in-law would get a contract for road signs, and your friend could get permission to build a high-rise in exchange for gifting your grandmother an apartment. Or two.

People went into power for this: to make money, or rather, to steal the money that the country made from selling natural resources abroad. Some of the proceeds were invested in homes and luxury lifestyles, some in new production, and some were funneled abroad through numerous firms in London and offshore accounts. The Russian elite actively purchased real estate in Spain, France, and Italy and acquired second citizenships: those who had the means did so in the US and UK; others did so in Cyprus, Israel, and the Czech Republic.

No one wanted change because the system needed to play the long game—so that the elite knew what to expect in five or ten years. The regime never thought of fighting corruption because it was built on corruption. It fought those who tried to expose the schemes of corrupt officials and demanded fair elections and the equitable redistribution of national wealth. These people were labeled extremists, imprisoned, or even killed—like Alexei Navalny.

The economy stopped growing, and problems started piling up in the country, but to solve them, it was necessary to change the leadership, which operated by the formula: “I’ll damage Russia by $1000, but I’ll pocket $100.” By 2011, civil society in Russia had grown strong enough to organize mass protests. But it ended with crackdowns and arrests.

Putin needed to legitimize his power, so he resorted to a classic strategy: shifting the focus of public attention away from the real situation and rallying around the flag. In such a situation, what could be better than a small victorious war? In 2014, Putin annexed Crimea and attacked Donbas, but it only helped temporarily. COVID-19 hit Russia’s well-being hard, killing a huge number of people, and new scandals kept emerging, showing that the government didn’t just want to make changes; it couldn’t.

Meanwhile, the president aged, grew more isolated from those around him, and began to live in a bubble, holding on to his own version of reality. There were personal grudges, unrealized dreams, and a desire to crush political opponents. He thought he could repeat the success of 2014 and boost his ratings once again. Thus, the war in Ukraine began.

Initially, it was planned as a gangster-style raid reminiscent of the 1990s, but it didn’t go as expected. The failure occurred because Russia lacked a system of power transition. The country’s leadership had been in place for decades, living in an echo chamber, unaware that subordinates only brought them reports that guaranteed their favor.

Resentment and Missed Opportunities

Vladimir Putin’s rule has remained stable in part because he played on the widespread sense of resentment that runs deep in Russian society. As I mentioned before, the way recent history is viewed in Russia differs greatly from the West.

For the West, the 1990s were a time when the threat of nuclear war and the spread of communism receded. It was a time of relief, where resources could be redirected from defense to building a new life.
For Russia, however, the situation felt more like Germany’s defeat in World War I.

First, the collapse of the familiar system was as unexpected for the Russians as it was for the Germans. Both in Germany and Russia, people lost all their savings during hyperinflation. Unemployment was rampant, and swarms of crooks and criminals emerged, while corrupt officials tried to fill their pockets during the nation’s collective misfortune.

In both Germany and Russia, there was a profound sense of injustice and betrayal. The outside world was either hostile or indifferent. Many intellectuals emigrated, while those who portrayed themselves as patriots and swore loyalty to their country promoted nationalist ideas.

In both countries, there was a massive gender imbalance in favor of women: in Germany, due to the losses from World War I, and in Russia, because of the widespread alcoholism among men. This fostered a longing for a strong leader—someone to play the role of the man of the house.

Both countries experienced a sharp but short-lived economic rise, along with growing political repression and a suppression of free speech. A new war seemed inevitable, and society didn’t resist it, as dissenting voices were silenced, and those who were compliant were promised that war would lead to the building of a stronger country and personal prosperity. In both cases, it ended badly.

What Could Have Been Done Differently?

Could Russia have become a democracy in the 1990s? My answer is no. There were no real conditions for it.

First, there was no ideological foundation—people simply didn’t understand what democracy was, how it worked, or why it was better than the familiar authoritarianism. The values of progress and personal freedom matter only when you know what they are.

What could the West have done differently? It could have launched a few Russian-language media outlets aimed at the “common people,” and set a condition for the Russian government: if they restrict free speech, the West would stop trading with them and deny visas to the wives, mistresses, and children of high-ranking officials. The latter could have been kept confidential.

Even back then, Russia had many brilliant journalists and scholars who shared Western values, but they had no way to reach the common people because state-controlled media kept them out of the conversation. The internet was still in its early days. Some tried to start their own media, but the audiences they gathered were mostly other intellectuals with similar values. So, they created echo chambers for themselves. What needed to be done was to engage the common people—entertain them, encourage them, show them new possibilities—and at the same time educate them.

Second, there was no economic base for democracy in Russia. As I’ve explained in previous videos, Russia’s economy is structured like a bottleneck—you can’t act freely without the permission of officials. This system was born due to geographical reasons, where Tsarist power controlled the few seaports and trade routes. Later, the entire economic structure was built along the same lines.

This created chronic poverty and, as a consequence, political powerlessness at the lower levels of society, while the elite accumulated disproportionate wealth. The elite had no interest in losing their privileges, which would certainly disappear under a democratic system. So, they did everything to ensure that an authoritarian government stayed in power. With the collapse of the USSR, the elite didn’t lose anything; instead, they gained the ability to buy “Rolls-Royces” and mansions on the French Riviera.

What could the West have done differently? It could have cooperated with the middle class, especially those who hadn’t been tainted by military or other crimes, and allowed small and medium-sized businesses to thrive trading with with the West.

Sanctions and restrictions only made the bottleneck tighter, making ordinary people more dependent on the government. The demand for political freedom only arises when people have physical freedom.
Third, the Soviet regime consciously destroyed potential leaders who could have led the fight for democracy. They were eliminated during the 1920s and 1930s, and their descendants couldn’t carry on the knowledge of civil and political activity. This is why Alexei Navalny was seen as a miracle—he was truly unique: honest, fearless, and selfless. There’s no one else like him.

What could the West have done differently? Shift the focus from politics to culture and science. The West eagerly provided platforms for dissidents, but this only allowed Putin’s propaganda to claim that all of his opponents were working for the CIA. Things would have been different if the West had used Russia’s desire for international recognition. If they had first nurtured authority figures in the fields of culture and science, giving them status and recognition, then later engaging in politics, it would have allowed for the creation of opinion leaders who couldn’t be accused of “selling out.”

The Russian elite never understood—and still doesn’t—what advantages Russia could gain from becoming a democracy. On one side of the scale is the loss of high status and the familiar methods of enrichment. And on the other? Nothing. Is it any wonder the Russian elite hasn’t rushed to embrace the West? Personally, I’m not surprised.

Of course, with the start of the war, the elite got something entirely different from what they expected. But now it’s too late: the elite has turned towards nationalism and stoking resentment. If there’s no miracle, Russia will continue down this path as long as there’s enough strength and money.

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