Although aspects of capitalist policy were introduced under Gorbachev’s perestroika reforms in the late 1980s, large-scale privatization of Russia’s state-owned businesses did not take off until 1992. Russia initially pursued a process of voucher privatization, whereby all citizens received vouchers that could be used to obtain shares. Russia and much of the former Soviet Union possesses huge fossil fuel and precious metals deposits that constitute the bulk of their exports. Many of the largest state owned businesses involved the extraction and sale of lucrative natural resources; however, central planning had made them highly inefficient. Against a gathering economic crisis, a loans for shares scheme was introduced in 1995 whereby shares in major state businesses were exchanged for money, often lent by banks at reduced rates through insider dealings. These shares were sold at auctions, which were often fixed, and thus the Russian oligarchs emerged, having obtained state assets at fractions of their market value.
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