counterparts. The government's apparent in-
tent was to use foreign banks to provide fi-
nancial intermediation services on the basis
of free-market principles rather than have the
country's wealth frittered away through cor-
ruption and ineptitude.
envisioned in Putin's Russia Inc. model. How-
ever, when oil revenues dropped and private
capital inflows atrophied, the consequences
of this odd hybrid economic strategy became
all too apparent.
financial system more efficient and resilient
to external shocks. With the loss of access to
private credit, domestic or foreign, during the
to support demand. And while the govern-
ment possessed humongous financial re-
sources and wielded unchecked authority, it
fective stabilization plan. As a result, the
country's economic contraction has been
much greater than that of most countries.
declines of late 2008 stripped away the facade
of success. The government had focused dis-
proportionate wealth and attention on the big
conglomerates that it could and did control.
In the process, it had neglected small- and
medium-sized enterprises or, more to the
point, it had neglected the reforms of private
capital markets and the legal system that were
needed to fertilize the ground for their growth.
transition of the more successful former So-