From the collapse of the Soviet Union to the post‑Hormuz world, a thirty‑year cycle of grievance and overreach has left both nations trapped. But the baseline of rational policy is still within reach.
1. The Missed Exit: 1990
The Soviet Union did not have to die as it did. In September 1990, the “Shatalin Plan” – a 500‑day programme for a gradual, democratic transition to a market economy – was debated in the Soviet parliament. It envisioned managed privatisation, a social safety net, and a phased integration into the global economy. It was rejected. By the time the USSR collapsed in December 1991, the window for an orderly, consensual transition had slammed shut.
What followed was not a planned transition but a catastrophe. The economic “shock therapy” imposed by the Yeltsin government – with enthusiastic endorsement from the IMF, the World Bank, and the US Treasury – was not a strategy. It was an ideology. Prices were liberated overnight, state subsidies were slashed, and a “voucher privatisation” scheme transferred the nation’s industrial crown jewels to a handful of well‑connected insiders for a fraction of their value.
The result: hyperinflation (nearly 2,000 %), a GDP that fell by almost 50 %, and a life expectancy that plummeted. Ordinary Russians lost their savings, their pensions, their dignity. A tiny oligarch class emerged, enriched beyond imagination, while the state collapsed into a hollow shell.
2. The Grievance That Made Putin
Vladimir Putin did not come from nowhere. He was not inevitable. He was the response to a failure. Boris Yeltsin, sick and humiliated, chose a relatively obscure former intelligence officer as his successor because Putin promised two things that the 1990s had obliterated: order and stability.
The early Putin years were, in fact, a reaction against the neoliberal plunder of the 1990s. He re‑established state control over strategic industries, clawed back some of the oligarchs’ power, and stabilised the economy. To a population that had seen its national patrimony auctioned off for a pittance, this looked like salvation.
But the choice was wrong – not morally, perhaps, but strategically. Putin’s Russia doubled down on resource dependence. Oil, gas, and minerals came to dominate exports. The Dutch disease set in: manufacturing atrophied, innovation stalled, and the state became a rent‑seeker, not a builder.
The grievance that had been born in the 1990s – the sense of national humiliation, of having been betrayed by the West – was never resolved. It was merely weaponised. Confrontation with the West became a tool of domestic legitimacy, and the slow decay of the Russian economy became a self‑fulfilling prophecy.
3. The American Overreach
On the other side of the Atlantic, the US made its own set of catastrophic mistakes. The Clinton administration’s “engagement and enlargement” doctrine was not wrong in its goals – a Europe whole, free, and at peace. But it failed to recognise when victory had already been achieved.
The admission of Poland, Hungary, and the Czech Republic into NATO was a triumph of attraction. Those nations had chosen the West. That should have been a capstone, not a prelude. Instead, the US continued to push NATO eastward, treating Russia as a defeated enemy rather than a potential partner.
By the late 1990s, the US had abandoned the patient work of “showing, not telling.” The “Washington Consensus” was exported as a one‑size‑fits‑all doctrine, with little regard for local conditions. The 1999 Kosovo war – justified on humanitarian grounds – was also a demonstration that the US would act unilaterally, without the UN Security Council. Russia watched, and learned.
The 2008 financial crisis then shattered the remaining legitimacy of the US‑led economic model. The same banks that had been deregulated with such enthusiasm were bailed out, while ordinary homeowners lost their houses. The “universalist globalist project” of the 1990s – for all its flaws – was abandoned. In its place came a more nakedly imperial posture: the “war on terror,” the Iraq invasion, the use of economic sanctions as a weapon of first resort.
4. The Cycle of Grievance
By the time the Strait of Hormuz closed in 2026, the US‑Russia relationship was no longer about rational interests. It was about grievances. Russia resented the Eastward expansion of NATO, the humiliation of the 1990s, the feeling that the West had deliberately impoverished it. The US resented Russia’s intervention in its elections, its cyber‑attacks, its role as a spoiler.
Both nations had become trapped in a cycle where policy was driven by the desire to “punish” the other, rather than to advance their own long‑term prosperity. The energy crisis of 2026 – with oil approaching $200 a barrel – only deepened the mutual suspicion.
5. The Return to Baseline
Here is the hopeful conclusion, against all odds: both the United States and Russia have an opportunity to return to a state where grievances do not shape their policy choices.
That baseline is not a return to the naive universalism of the 1990s. That era is dead. But it is also not the permanent confrontation of the 2020s. It is a pragmatic, interest‑based, mutual accommodation.
- For Russia, the baseline means diversifying away from resource dependence, building a modern industrial economy, and accepting that its long‑term security lies in stability, not in confrontation. The model is not the Soviet past, but a post‑Putin future in which the state is a partner to enterprise, not a predator.
- For the United States, the baseline means rediscovering the power of attraction over coercion. It means strengthening alliances (in Europe, in Asia, in Africa) through trade, science, and cultural exchange – not through lectures or bombs. It means accepting that the world is multipolar and that the US cannot impose its will by force.
The specific policy steps are well known: arms control agreements that both sides honour; a gradual unwinding of sanctions in exchange for verifiable Russian compliance; joint investment in Arctic infrastructure, clean energy, and space exploration. None of it is easy. All of it is possible.
6. The Latin American Precedent: Argentina’s Crossroads
This pattern of grievance-fueled politics is not confined to the former Soviet space. It is repeating today in Argentina. President Javier Milei came to power promising to slash the state, tame inflation, and break the cycle of Peronist clientelism. He has succeeded in bringing inflation down from over 200% to roughly 30%. But the social cost has been brutal: nearly 73,000 manufacturing jobs have been erased, 2,400 industrial companies have closed, and unemployment has climbed to 7.5% – the highest level since the pandemic. Meanwhile, Milei’s approval rating has fallen to just 35%, with over 56% of Argentines now disapproving of his presidency. The country is experiencing its fourth major wave of university protests, with hundreds of thousands of people taking to the streets in May 2026 alone. The parallels to 1990s Russia are unmistakable. In both cases, a shock-therapy reform package imposed by a charismatic leader, backed by the IMF and cheered by Western markets, produced a brutal near-term dislocation. And in both cases, the political consequence could be the emergence of a “strongman” who promises to restore order, punish the oligarchs, and roll back the neoliberal excesses. That figure would be Argentina’s own Vladimir Putin – a leader who would not defend democracy but would exploit the grievance that shock therapy left behind. The Argentine elite has a choice: continue down the current path of polarization and social fragmentation, or formulate alternative structural policies that manage the transition with a greater sense of social cohesion and political inclusion. The history of Russia offers a clear warning: once a society is traumatized by an economic collapse it blames on outsiders and reformers, the window for a peaceful, democratic, pro-market outcome closes – sometimes for decades. Argentina still has that window. It should not squander it.