Several Soviet Socialist Republics began resisting central control, and increasing democratization led to a weakening of the central government. The USSR's trade gap progressively emptied the coffers of union, leading to eventual bankruptcy. The Soviet Union finally collapsed in 1991 when Boris Yeltsin seized power in the aftermath of a failed coup that had attempted to topple reform-minded Gorbachev.
After years of stagnation, the "new thinking" of younger Communist apparatchiks began to emerge. Following the death of terminally ill Konstantin Chernenko, the Politburo elected Mikhail Gorbachev to the position of General Secretary of the Soviet Union in March 1985, marking the rise of a new generation of leadership. Under Gorbachev, relatively young, reform-oriented technocrats, who had begun their careers in the heyday of "de−Stalinization" under Nikita Khrushchev (1953-1964), rapidly consolidated power within the CPSU, providing new momentum for political and economic liberalization, and the impetus for cultivating warmer relations and trade with the West.
Jimmy Carter had officially ended the policy of Détente, by militarily aiding President of Pakistan Muhammad Zia-ul-Haq, who in turn funded the anti−Soviet Mujahideen movement in neighboring Afghanistan, which served as a pretext for the Soviet intervention in Afghanistan six months later, with the aims of supporting the Afghan government, controlled by the People's Democratic Party of Afghanistan. Tensions between the superpowers increased during this time, when Carter placed trade embargoes on the Soviet Union and stated that the Soviet invasion of Afghanistan was "the most serious threat to the peace since the Second World War". East-West tensions only increased during the first term of U.S. President Ronald Reagan (1981-1985), reaching levels not seen since the 1962 Cuban missile crisis.
By the time Gorbachev ushered in the process that would lead to the dismantling of the Soviet administrative command economy through his programs of glasnost (political openness), perestroika (economic restructuring), and uskoreniye (speed-up of economic development) announced in 1986, the Soviet economy suffered from both hidden inflation and pervasive supply shortages aggravated by an increasingly open black market that undermined the official economy. Additionally, the costs of superpower status—the military, space program, subsidies to client states—were out of proportion to the Soviet economy. The new wave of industrialization based upon information technology had left the Soviet Union desperate for Western technology and credits in order to counter its increasing backwardness.
The Law on Cooperatives enacted in May 1988 was perhaps the most radical of the economic reforms during the early part of the Gorbachev era. For the first time since Vladimir Lenin's New Economic Policy, the law permitted private ownership of businesses in the services, manufacturing, and foreign-trade sectors. Under this provision, cooperative restaurants, shops, and manufacturers became part of the Soviet scene.
Glasnost resulted in greater freedom of speech and the press becoming far less controlled. It is likely that Gorbachev's primary goal in undertaking glasnost was to pressure conservatives who opposed his policies of economic restructuring, although he also hoped that through different ranges of openness, debate and participation, the Soviet people as a whole would support his reform initiatives.
Thousands of political prisoners and many dissidents were also released. Soviet social science became free to explore and publish on many subjects that had previously been off limits, including conducting public opinion polls. The All−Union Center for Public Opinion Research (VCIOM) — the most prominent of several polling organizations that were started then — was opened. State archives became more accessible, and some social statistics that had been kept secret became open for research and publication on sensitive subjects such as income disparities, crime, suicide, abortion, and infant mortality. The first center for gender studies was opened within a newly formed Institute for the Socio−Economic Study of Human Population.
In January 1987, Gorbachev called for democratization: the infusion of democratic elements such as multi−candidate elections into the Soviet political process. A 1987 conference convened by Soviet economist and Gorbachev adviser Leonid Abalkin, concluded: "Deep transformations in the management of the economy cannot be realised without corresponding changes in the political system.
In June 1988, at the CPSU's Nineteenth Party Conference, Gorbachev launched radical reforms meant to reduce party control of the government apparatus. In December 1988, the Supreme Soviet approved the establishment of a Congress of People's Deputies, which constitutional amendments had established as the Soviet Union's new legislative body.
Elections to the congress were held throughout the USSR in March and April 1989. Gorbachev, as General Secretary of the Communist Party, could be forced to resign at any moment if the communist elite became dissatisfied with him. In order to proceed with reforms opposed by the majority of the communist party, Gorbachev aimed to consolidate power in a new position, President of the Soviet Union, which was independent from the CPSU and the soviets (councils) and whose holder could be impeached only in case of direct violation of the law. On March 15, 1990, Gorbachev was elected as the first executive president. At the same time, the constitution was changed to deprive the CPSU of political power.
Relaxation under glasnost resulted in the Communist Party losing its absolute grip on the media. Before long, and much to the embarrassment of the authorities, the media began to expose severe social and economic problems the Soviet government had long denied and actively concealed. Problems receiving increased attention included poor housing, alcoholism, drug abuse, pollution, outdated Stalin-era factories, and petty to large−scale corruption, all of which the official media had ignored. Media reports also exposed crimes committed by Stalin and the Soviet regime, such as the gulags, his treaty with Adolf Hitler, and the Great Purges, which had been ignored by the official media. Moreover, the ongoing war in Afghanistan, and the mishandling of the 1986 Chernobyl disaster, which Gorbachev tried to cover up, further damaged the credibility of the Soviet government at a time when dissatisfaction was increasing.
In all, the very positive view of Soviet life which had long been presented to the public by the official media was being rapidly dismantled, and the negative aspects of life in the Soviet Union were brought into the spotlight. This undermined the faith of the public in the Soviet system and eroded the Communist Party's social power base, threatening the identity and integrity of the Soviet Union itself.
Fraying amongst the members of the Warsaw Pact nations and instability of its western allies, first indicated by Lech Wałęsa's 1980 rise to leadership of the trade union Solidarity, accelerated, leaving the Soviet Union unable to depend upon its Eastern European satellite states for protection as a buffer zone. By 1989, Moscow had repudiated the Brezhnev Doctrine in favor of non−intervention in the internal affairs of its Warsaw Pact allies. Gradually, each of the Warsaw Pact nations saw their communist governments fall to popular elections and, in the case of Romania, a violent uprising. By 1991 the communist governments of Bulgaria, Czechoslovakia, East Germany, Hungary, Poland and Romania, all of which had been imposed after World War II, were brought down as revolution swept Eastern Europe. The Soviet Union also began experiencing upheaval as the political consequences of glasnost reverberated throughout the country. Despite efforts at containment, the upheaval in Eastern Europe inevitably spread to nationalities within the USSR. In elections to the regional assemblies of the Soviet Union's constituent republics, nationalists as well as radical reformers swept the board. As Gorbachev had weakened the system of internal political repression, the ability of the USSR's central Moscow government to impose its will on the USSR's constituent republics had been largely undermined. Massive peaceful protests in the Baltic Republics such as The Baltic Way and the Singing Revolution drew international attention and bolstered independence movements in various other regions.
The rise of nationalism under glasnost soon reawakened simmering ethnic tensions in various Soviet republics, further discrediting the ideal of a unified Soviet people. One instance occurred in February 1988, when the government in Nagorno-Karabakh, a predominantly ethnic Armenian region in the Azerbaijan SSR, passed a resolution calling for unification with the Armenian SSR. Violence against local Azerbaijanis was reported on Soviet television, provoking massacres of Armenians in the Azerbaijani city of Sumgait.
Emboldened by the liberalized atmosphere of glasnost, public dissatisfaction with economic conditions was much more overt than ever before in the Soviet period. Although perestroika was considered bold in the context of Soviet history, Gorbachev's attempts at economic reform were not radical enough to restart the country's chronically sluggish economy in the late 1980s. The reforms made some inroads in decentralization, but Gorbachev and his team left intact most of the fundamental elements of the Stalinist system, including price controls, inconvertibility of the ruble, exclusion of private property ownership, and the government monopoly over most means of production.
By 1990 the Soviet government had lost control over economic conditions. Government spending increased sharply as an increasing number of unprofitable enterprises required state support and consumer price subsidies to continue. Tax revenues declined as republic and local governments withheld tax revenues from the central government under the growing spirit of regional autonomy. The anti−alcohol campaign reduced tax revenues as well, which in 1982 accounted for about 12 percent of all state revenue. The elimination of central control over production decisions, especially in the consumer goods sector, led to the breakdown in traditional supplier−producer relationships without contributing to the formation of new ones. Thus, instead of streamlining the system, Gorbachev's decentralization caused new production bottlenecks.
The constituent republics began to assert their national sovereignty over Moscow and started a "war of laws" with the central government, wherein the governments of the constituent republics repudiated all-union legislation where it conflicted with local laws, asserting control over their local economies and refusing to pay tax revenue to the central Moscow government. This strife caused economic dislocation as supply lines in the economy were severed, and caused the Soviet economy to decline further.
The pro-independence movement in Lithuania, Sąjūdis, established on June 3, 1988, caused a visit by Gorbachev in January 1990 to the Lithuanian capital, Vilnius, which provoked a pro-independence rally of around 250,000 people.
On March 11, 1990, Lithuania, led by Chairman of the Supreme Council Vytautas Landsbergis, declared restoration of independence. However, the Soviet Army attempted to suppress the movement. The Soviet Union initiated an economic blockade of Lithuania and kept troops there "to secure the rights of ethnic Russians."
On March 30, 1990, the Estonian Supreme Council declared Soviet power in Estonia since 1940 to have been illegal, and started a process to reestablish Estonia as an independent state. The process of restoration of independence of Latvia began on May 4, 1990, with a Latvian Supreme Council vote stipulating a transitional period to complete independence.
On January 13, 1991, Soviet troops, along with KGB Spetsnaz Alpha Group, stormed the Vilnius TV Tower in Vilnius, Lithuania to suppress the nationalist media. This ended with 14 unarmed civilians dead and hundreds more injured. Later that month in Georgian SSR, anti-Soviet protesters at Tbilisi demonstrated support for Lithuanian independence.
On March 17, 1991, in a Union-wide referendum 78% of all voters voted for the retention of the Soviet Union in a reformed form. The Baltics, Armenia, Georgia and Moldova boycotted the referendum. In each of the other nine republics, a majority of the voters supported the retention of the renewed Soviet Union. Following the results, Armenia indicated it wanted to rejoin in Union discussion.
On June 12, 1991, Yeltsin won 57% of the popular vote in the democratic elections for the post of president of the Russian SFSR, defeating Gorbachev's preferred candidate, Nikolai Ryzhkov, who won 16% of the vote. In his election campaign, Yeltsin criticized the "dictatorship of the centre", but did not suggest the introduction of a market economy. Instead, he said that he would put his head on the railtrack in the event of increased prices. Yeltsin took office on July 10.
On the night of July 31, 1991, Russian OMON from Riga, the Soviet military headquarters in the Baltics, assaulted the Lithuanian border post in Medininkai and killed seven Lithuanian servicemen. This further weakened the Soviet Union's position, internationally and domestically.
Faced with growing republic separatism, Gorbachev attempted to restructure the Soviet Union into a less centralized state. On August 20, 1991, the Russian SFSR was scheduled to sign the New Union Treaty, which was to convert the Soviet Union into a federation of independent republics with a common president, foreign policy and military. The new treaty was strongly supported by the Central Asian republics, which needed the economic power and common markets of the Soviet Union to prosper. However, this meant the preservation of the Communist Party control over economy and social life. The more radical reformists were increasingly convinced that a rapid transition to a market economy was required, even if the eventual outcome included the disintegration of the Soviet state. Disintegration of the USSR also accorded with the desire of local authorities, such as Yeltsin's presidency, to establish full power over their territories and get rid of pervasive Moscow ideological control. In contrast to the reformers' lukewarm approach to the new treaty, the conservatives and remaining patriots of the USSR, still strong within the CPSU and military establishment, were completely opposed to anything which might contribute to the weakening of the Soviet state.
On August 19, 1991, Gorbachev's vice president Gennadi Yanayev, prime minister Valentin Pavlov, defense minister Dmitriy Yazov, KGB chief Vladimir Kryuchkov, and other senior officials acted to prevent the signing of the union treaty by forming the "State Committee on the State Emergency." The "Committee" put Gorbachev (vacationing in Foros, Crimea) under house arrest, reintroduced political censorship, and attempted to stop the perestroika. The coup leaders quickly issued an emergency decree suspending political activity and banning most newspapers.
While coup organizers expected some popular support for their actions, the public sympathy in large cities and in republics was largely against them. Russian SFSR President Boris Yeltsin was quick to condemn the coup and grab popular support for himself.
Thousands of people in Moscow came out to defend the "White House" (Yeltsin's office), then the symbolic seat of Russian sovereignty. The organizers tried but ultimately failed to arrest Yeltsin, who rallied mass opposition to the coup.
After three days, on August 21, the coup collapsed, the organizers were detained, and Gorbachev returned as president of the Soviet Union. However, Gorbachev's powers were now fatally compromised, as neither union nor Russian power structures heeded his commands.
After the coup, the Soviet republics accelerated their process towards independence, declaring their sovereignty one by one. Their local authorities started to seize property located on their territory. On September 6, 1991, the Soviet government recognized the independence of the three Baltic states, which the western powers had always held to be sovereign. Yet, in the battle of power, on October 18 Gorbachev and the representatives of 8 republics (excluding Azerbaijan, Georgia, Moldova, Ukraine, and the Baltic States) signed an agreement on forming a new economic community.
Meanwhile, the Soviet economic situation continued to deteriorate. By December 1991, food shortages in central Russia had prompted food rationing in the Moscow area for the first time since World War II. Amid steady collapse, Soviet President Gorbachev and his government continued to oppose rapid market reforms like Yavlinsky's "500 Days" program. To break Gorbachev's opposition, Yeltsin decided to disband the USSR in accordance with the Treaty of the Union of 1922 and thereby remove Gorbachev and the Soviet government from power. This was seen as a forced measure to save the country from complete economic collapse and was at the time widely supported by Russia's population. The step was also enthusiastically supported by the governments of Ukraine and Belarus, which were parties of the Treaty of 1922 along with Russia.
The final round of the Soviet Union collapse took place following the Ukrainian popular referendum on December 1, 1991, wherein 90% of voters opted for independence. The leaders of Slavic republics agreed to meet for a discussion of possible forms of relationship, alternative to Gorbachev's struggle for a union.
On December 8, 1991, the leaders of the Russian, Ukrainian, and Belarusian republics met in Belavezhskaya Pushcha and signed the Belavezha Accords declaring the Soviet Union dissolved and replaced by the Commonwealth of Independent States (CIS). Gorbachev described this as an unconstitutional coup, but it soon became clear that the development could not be halted.
On December 12, 1991, Russia's secession from the Union was sealed, with the Congress of Soviets of RSFSR formally ratifying the Belavezha Accords and denouncing the 1922 Treaty on the creation of the Soviet Union.
On December 17, 1991, alongside 28 European countries, the European Community, and four non-European countries, twelve of the fifteen soviet republics signed the European Energy Charter in the Hague as if they were sovereign states.
Doubts remained over the authority of the Belavezha Accords to effect the dissolution of the Soviet Union, since they were signed by only five of the Soviet Republics. However, on December 21, 1991, representatives of all member republics except Georgia signed the Alma Ata Protocol, in which they confirmed the dissolution of the Union. That same day, all former-Soviet republics agreed to join the CIS, with the exception of the three Baltic States. The documents signed at Alma Ata also addressed several issues raised by the Union's extinction. Notably, Russia was authorized to assume the role of the USSR in the United Nations, which meant inheriting its permanent membership on the Security Council. On December 24, 1991, the Soviet Ambassador to the UN delivered to the Secretary General a letter by Russia's president, Boris Yeltsin, informing him that, in virtue of that agreement, Russia was the successor state to the USSR for the purposes of UN membership. After being circulated among the other UN member states with no objection raised, the statement was declared accepted on December 31.
On December 25, 1991, Gorbachev resigned as president of the USSR, declaring the office extinct and ceding all the powers still vested in it to the president of Russia: Yeltsin. On the night of that same day, the Soviet flag was lowered for the last time over the Kremlin. Finally, a day later on December 26, 1991, the Council of Republics (a chamber) of the Supreme Soviet of the USSR recognized the dissolution of the Soviet Union and dissolved itself (another chamber of the Supreme Soviet had been unable to work during some months before this, due to absence of quorum). By December 31, 1991, all official Soviet institutions had ceased operations as individual republics assumed the central government's role.
But by using structural reforms to widen opportunities for leaders and popular movements in the union republics to gain influence, Gorbachev also made it possible for nationalist, orthodox communist, and populist forces to oppose his attempts to liberalize and revitalize Soviet communism. Although some of the new movements aspired to replace the Soviet system altogether with a liberal democratic one, others demanded independence for the national republics. Still others insisted on the restoration of the old Soviet ways. Ultimately, Gorbachev could not forge a compromise among these forces and the consequence was the collapse of the Soviet Union.
Market economists believed that the dismantling of the administrative command system in Russia would raise GDP and living standards by allocating resources more efficiently. They also thought the collapse would create new production possibilities by eliminating central planning, substituting a decentralized market system, eliminating huge macroeconomic and structural distortions through liberalization, and providing incentives through privatization.
Since the USSR's collapse, Russia had faced many problems that free market proponents in 1992 did not expect. Among other things, 25% of the population lived below the poverty line, life expectancy had fallen, birthrates were low, and the GDP was halved. These problems led to a series of crises in the 1990s, which nearly led to election of Yeltsin's Communist challenger, Gennady Zyuganov, in the 1996 presidential election. In the recent years, the economy of Russia has begun to improve greatly, due to major investments and business development and also due to high prices of natural resources.