I was an investment banker in London when the Berlin Wall fell in November of 1989. Over the next two years, Russia’s already weak economy accelerated its steep descent into a state of total dysfunction. By 1992, the centrally planned apparatchik economy no longer functioned. Companies paid their employees in worthless currency. Goods, if they were produced at all, were left abandoned in warehouses because nobody wanted them. Vital products were in short supply and could only be procured with hard currency on the black market controlled by murky criminals. In Moscow, there were very few cars on the roads and shop windows were bare. People walked the streets with their heads held low, and the only public excitement seemed to be at the McDonald’s restaurant off Tverskaya Street, where throngs of people lined up to pay a week’s wages for a happy meal for their children.
Over the next few years, Western nations sought to aid their former Cold War enemy in transitioning to the new world order. By mid-1993, with the assistance of the International Monetary Fund (“IMF”) and the European Bank for Reconstruction and Development (EBRD), there slowly began an almost unnoticeable transformation. The green sprouts of the private sector were beginning to grow. The new economic norm, in which you could buy anything you wanted, had previously been the illegal black market just a few months earlier. Factories that had been producing goods no one wanted were retooling to make everything from titanium bike frames to U.S. replica shotguns. Aluminum smelters with cheap hydroelectric power were suddenly the world’s low-cost producers, exporting every ingot they could make. The old Russian command economy had no choice but to adapt to free market forces, and its workers and consumers were beginning to respond.
