The collapse of Soviet Union and communism in 1991 was a great event in the history of the world. After the disintegration of Soviet Union, the Eastern European states and Russia faced many challenges. One of the great challenges was the difficulty of transition from communism to democracy. East European states so long had depended upon Soviet Union for central planning and guidance. The process of transition to democratic government posed great problems for the people of Eastern Europe as well as Soviet Union.

Another surmounting problem was economic. The inflation was at the highest in Russia as well as in East European nations. There was rapid reduction in production as well as unemployment. All former countries of Soviet Union had faced economic depression. The Eastern European states found it difficult to adjust with the capitalism. The Russian economy was so bad in 1991 that Russian President Boris Yelstin introduced "shock therapy" to save the economy.

After the fall of communism, there arose sectional conflicts in many parts of Russia especially in Chechnya. Chechnya is a Muslim dominated area in South West Russia. The conflict which began in 1994 ended in 1996 with a peace agreement.