I wouldn't say the Russia's shitholeness has to do with westernisation. But, I can guess what was meant.

When the Russia became capitalist, almost nobody had any idea of the value of property. The factories became private property of their workers, but there could have been 1000 workers in a factory and people were like "what the hell am I gonna do with a paper proving that I own 0.1 % of a factory?!"

And then there were people who were driving around with a van full of vodka bottles. You handed out a bottle of vodka, you got a share. So, a full factory cost you one thousand bottles of vodka, and that's it. Or actually, 501 bottles of vodka, because a majority was enough. And even less, because most people didn't come to the meetings to vote, so you didn't really need more than a handful of shares to start making decisions that helped you gain a lot more influence.

The Russians thought that if they just have capitalism, then everything will soon be good. And Europe and USA were okay with that rather moronic thought, not really doing much anything to warn them that they are about to crash head first against a wall. Also, I think that especially in USA there were people interested in seeing what happens if a country tries to go fully capitalist with no state controls whatsoever.

It's a bit bonkers saying that is "westernization", as there are many western countries and only one actually has a system even somewhat like that of USA. So, maybe you could say that the Russia is a shithole because of americanisation (one done horribly badly), and that's almost surely what was meant with "because of westernisation".

But indeed: In the 1990's people in the Russia did those stupid decisions because they wanted to become a part of the west. And that failed. And instead of looking at what had gone wrong, the majority there just decided: "It's the west's fault! They did this to us!"

In year 1998 there was a huge amount of inflation, and basically, if you had enough money on your bank account to buy a house in January 1998, in December 1998 you were barely able to buy a loaf of bread with that money, as all money in the Russia lost something like 99.999% of its value in 1998. That was a horrible time, and the only year more horrible than that in the history of the Russia is 2026 (or maybe 2027).