ABSTRACT
Putin modified the close and unhealthy relationship between the state and
the economy that had developed under Yeltsin. The privileges of various
business and commercial structures had turned into a specific type of ‘state within the state’, with their own media empires, house politicians, television
channels and security services. Hellman described developments under Yeltsin
as ‘partial reform equilibrium’, with regional bosses and oligarchs taking
advantage of an economy stuck midway between the plan and the market.2
Although the degree to which a balance had been achieved is unclear, this
‘equilibrium’ was now upset by the emergence of an activist presidency. The
principle of ‘equidistance’ between business interests and the state had been
advanced in the struggle against certain oligarchs, but the result was a change in the nature of Russia’s political economy. Putin inherited an economy that
was barely emerging from the traumas of rapid marketisation and privati-
sation, and, while he built on the legacy, a remarkably benign economic
environment allowed a new economic model to be applied.
