Russian Federation 371 Saint Basil’s Cathedral in the Kremlin in Moscow during the Soviet era The Soviet Union was a significant example of communism in the world With the splintering of the Soviet Union, the different republics that had formed the union sought to redefine themselves from among its own members a smaller legislature— the Supreme Soviet—to meet between its own sessions The constitution’s provision that the legislature was the supreme state body was not modified after the creation of the elected Russian presidency in 1991 Crisis and Confrontation The period from the end of 1991 to late 1993 was marked by economic crisis and political confrontation that ended in bloodshed The two poles of confrontation centered on the reformist presidency and the holdover parliament, the Congress of People’s Deputies, which fought a protracted battle over who held ultimate authority For the post of prime minister, Yeltsin named Yegor Gaidar, a young academic who had taught himself market economics during the late Soviet period, but the legislature refused to confirm him Gaidar, nonetheless, continued in office as acting prime minister for one year The economy was in dire shape, quite apart from the normal inefficiencies of the centrally planned Soviet system In the name of economic reform the Gorbachev government had ceased issuing orders to state-owned economic enterprises, but he had failed to establish the institutions of a market economy, resulting in a staterun system that did not work properly The breakup of the Soviet state exacerbated the situation by disrupting economic ties between regions Gaidar’s response was a rapid shift, often termed “shock therapy,” to free prices, balanced budgets, and monetary restraint This went into effect on January 1, 1992, and resulted in an enormous leap in prices in addition to the already existing shortages of supply Normally, the shortages and rising prices should have worked as an incentive for enterprises to increase production State enterprises, however, had not been privatized, and adequate market-based incentives had not been established Wholesale trade, at the time, was still widely regarded as a form of illegal “speculation.”