This organization continues to press forward in the direction of a market-based economy today. However, the formation of the CIS did not smother all of the discord caused by these upheavals, and the flames of dissent continue to smolder throughout the old federation. Confusion on the Russian political scene continues to frustrate the smooth implementation of commercial operation in the NSR. A power struggle continues between the center and the regions. Boris Yeltsin, the first popularly elected head of state in Russian history, attempted to centralize political power in Russia, but this scheme was thwarted in the face of strong regionalism. In 1997 the President lost the power to appoint most of the governors of Russia's constituent states and regions, as these public figures came to be directly elected. This tug of war between centralism and regionalism seems set to swing back and forth for the foreseeable future.
This expansion of regional autonomy in Russia makes it necessary to clarify the benefits the NSR brings to each affected region. Therefore, the international community must be made aware of the planning scenarios under development, how the project will be funded, which organizations will implement the project and bear the risk, and what the time-frame will be, with respect to the infrastructure that will have to be built to render the NSR usable and the issues regarding preservation of coastal environments. Ironically, the development of the NSR benefited richly from the Cold War and the Soviet system, which provided generous navigational infrastructure. This was made possible by highly disciplined cooperation between the civilian, military and scientific sectors, which operated on an equal footing and on their own terms.
2.3 Economic and Shipping Background
The onslaught of perestroika and glasnost ("openness" in government) was preceded by a Russian economy in imminent danger of complete collapse. The government was under tremendous pressure to adopt radical measures, including granting permission for the formation of private companies. It was soon recognized that the conditions underpinning the switch from state-owned to privately owned enterprises, such as the rights to earn profits, raise funds independently and elect enterprise leaders, would come to naught if the reforms did not extend to political restructuring as well. A rapid-fire battery of legislation - such as the Law on Individual Labor Activities and the Law on Joint-Venture Companies, passed in 1987, and the Law on Cooperative Associations, promulgated in 1988 - provided a framework for these new enterprises to operate in. At the same time as these economic reforms were being carried out, however, the ruling party overseeing them was riven with strife. Russia lurched into political chaos before the effects of these reforms could be realized, throwing its economy deeper into disarray.
During this period of confusion, each of the former Republics featured a dual economy: an official economy and an underground one. In Russia, the old planned economy, or centrally run economy, continued to run Soviet-style economic activity with strong centralization of power and strict control according to a centrally determined plan. Little room was left over for free competition based on market principles. Parallel to the official economy, the underground economy was formed from the various commercial, service, transportation and distribution sectors that had always been looked on with contempt under the command economy. To the government, these activities consisted of nothing more than illegal black-marketeering. As the Russian Federation shifted toward a market economy, however, this underground economy (except for areas tainted with criminal activity) rose to the surface, and its commercial, service, transportation and distribution sectors quickly became the most vigorous part of the economy of the new Russia.
Under Boris Yeltsin, the Russian economy was torn apart by the President's "shock therapy" tactics. After three years of spiraling economic contraction that ended in 1992, the Russian economy continued to exhibit negative growth from 1992 to 1996, and the government's financial position steadily deteriorated.
