Yeltsin’s First Hundred Days
by Vladimir Bukovsky
As the crisis in Moscow once again hit the news in 1992 and early 1993 there was a panic in the Western capitals as well as among the Russian “democrats.” Some hastened to pronounce what was always expected and feared, yet hoped to be averted by a miracle—the death of post-August democracy in Russia. Others argued that it was still-born right from the start, or even that it was never quite a democracy.
But the general feeling was that, whatever it had been, it was effectively dead now, and whatever was replacing it was certainly going to be far worse. Many even likened the change to what had happened seventy-five years earlier, when a provisional government had been overthrown by the Bolsheviks; only this time they did it without a single shot and, hopefully, this time they are not going to stay for the next 75 years.
Needless to say, historic parallels are more often misleading than enlightening. While Yeltsin’s leadership in his first one hundred days can be compared with the provisional government of 1917, both being weak and indecisive, the present-day “Bolsheviks” are but a pale copy of the Lenin’s “professional revolutionaries.” If nothing else, they are even more split, more confused, and less popular than the “democrats.” They are defeated forces of the past, not the harbingers of the future, and their agenda does not go further than the dreams of restoration.
So, what then, happened in Moscow in 1992 and early 1993? Nothing much, in my view, except that the crisis deepened even further, and it became apparent even to Yeltsin’s “democrats” that they had wasted the few opportunities the August of 1991 “godsend” offered.
The formidable problems of transition from the decades of communist totalitarianism to democracy and market economy are too obvious to discuss here in great detail. On the one hand, there are the challenges presented by “collectivized” agriculture, the “giants of the socialist industry (both monopolistic and unproductive by their very design), the huge military-industrial complex, the lack of investment capital, depleted resources and, correspondingly, masses of low-skilled laborers who had never worked productively in their lives. (In 1987 workers in industry and agriculture accounted for 61.8 percent of the total population of the U.S.S.R. Collective farmers and intelligentsia accounted for 12 percent and 26.2 percent respectively.) Clearly, any attempt at restructuring such an economy, no matter how gradual and cautious it may be, is bound to create enormous turmoil, reduce the living standards of a sizable majority and generate a huge wave of social discontent. No elected government on earth is likely to survive such a reform, as no elected government could have created such an economy in the first place.
On the other hand, a society emerging from a totalitarian nightmare usually has no political or social structures capable of stabilizing it in transition except those created by and tainted by the totalitarian system. And they are most likely to oppose the changes, thus contributing to political instability typical for all post-totalitarian countries. The new institutions, although numerous and noisy, are usually tiny and weak to the point of merely symbolic existence. They are no match for the well-entrenched, all-pervasive, mafia-like structures evolving from the old regime. They are even too small to replace the governing apparatus and, therefore, the old nomenklatura remains in control of all executive functions of a presumably new “democratic” state.
It should be remembered that what we call “nomenklatura” is not just an ordinary bureaucracy, but a whole stratum of the society (18 million strong according to some estimates) with its own vested interests, its own connections with the West, its own accumulated wealth, and its own complicity in past crimes to unite its members. Its mere existence poses real threat to fragile democracy, to say nothing of its control over the executive branch of the government. Add endless ethnic conflicts, fantastic corruption, skyrocketing crime rate, general apathy of the demoralized population, and the task of transition becomes all but impossible.
Also, let us not forget the less than friendly attitude of the West to attempts at establishing democracy in the former Soviet Union. While those who, like Gorbachev and his lot, strived to rescue the moribund communist system and equally doomed Union were given every assistance (including financial support to the tune of $45 billion!), their opponents were vilified right from the start as “unpredictable”, “unbalanced”, and “dangerous”.
Ridiculous as it may seem today, the West has done everything in its power to prolong the agony of the totalitarian system, thus driving the country deeper and deeper into a crisis and making the task of transition more and more difficult. And when this insanity finally stopped, it was not because the West wised up, but because the object of its generosity ceased to exist.
Still, I am convinced that, all these odds notwithstanding, the post-August 1991 democracy, or whatever one may call it, has had a chance of survival (and even of a reasonable success) if not for the colossal blunders made by Yeltsin and his team.
April of 1991
Tragically, they made their main conceptual mistake well before August by choosing a way of compromise and evolution rather than that of confrontation and revolution. It was a mistake so fundamental, so much determined by their “class-oriented narrow-mindedness” that we probably should not call it that name. Rather, to borrow Lenin’s terminology, we should call it a conscious choice of the people who “still could not rise above their class consciousness”. Being themselves a part of nomenklatura, they were more afraid of the people than of the Party when popular revolution knocked at the door.
By the end of 1990 it became abundantly clear that the Soviet regime was heading for catastrophe: While Gorbachev’s “perestroika” failed to deliver what was expected of it by its architects, it did unleash the forces leading to erosion of the regime’s foundations. The Soviet empire was in turmoil. From the Baltic Sea to the Caucasian Mountains and from the Danube to Siberia, former captive nations were rising up, demanding national independence. In Russia itself, elections to the Soviets of all levels, restricted and manipulated as they were, showed a clear vote of no confidence in the Communist Party. Hundreds of thousands of its members were quitting the ranks, while thousands were publicly burning their membership cards.
Furthermore, a wave of strikes was gathering momentum, threatening to grow into a general strike and to lead to the formation of Solidarity-type labor unions. Clearly, what was not far enough for economic revival was proving to be too far for the regime’s political survival; what was intended as a limited within-the-system readjustment was threatening to grow into a popular revolution.
But it was also becoming clear that the regime was preparing to defend itself by all means, including brutal force. In fact, the first signs of this preparation were in evidence as early as 1988 and became obvious by the end of 1989. Most radical elements of the reforms, such as the deregulation of prices and further decentralization, were already suspended. New restrictive laws were hastily introduced, curbing freedom of public meetings, limiting freedom of the press, restricting cooperatives and, above all, extending to the Soviet Army the power of the police. Then, new emergency laws banning strikes, more restrictions on cooperatives, and a decision to increase the number of the Interior Troops followed. Everything seemed to be ready for crackdown.
In spite of all that, and even after the massacres in Tbilisi (1989) and Baku (1990) had shown that Gorbachev was quite prepared to spill the blood, Yeltsin still hoped to work out a compromise. Only when his last attempt to push through a modest reform program (“500 Days”) in the fall of 1990 had been blocked by Gorbachev, and when most of the reform-minded leaders had been replaced by obvious thugs in the sweeping reshuffle of December 1990, was he forced to abandon this hope. Within a month, Gorbachev went onto the offensive: He curtailed glasnost, ordered a crackdown on private business activity, robbed old-age pensioners of their life savings, and organized a massacre in the Baltic states. Thus, confrontation between the people on the one hand, and the Party on the other became inevitable.
By a twist of the fate, this meant what Yeltsin tried to avoid: a personal confrontation between him and Gorbachev, the former being a symbol of the people and the latter of the Party. While Yeltsin had the courage to subject himself to the judgment of the nation and received a popular mandate, Gorbachev never took the risk, and he became hostage of the Party. That fact, more than anything else, determined their subsequent political evolution. Reflecting the difference in their respective power bases, Gorbachev had to hold together a disintegrating empire and to resist any further reforms, even if it required violence and repression, while Yeltsin had to support the republics in their rebellion against the center and to advocate radical economic reforms. One chose democracy and left the Party; the other had no choice but to defend the Party to the bitter end.
By the end of 1900 and the beginning of 1991, Yeltsin was the only credible leader of the democratic opposition in Russia. Whether he liked it or not, he had to lead the country into a confrontation with the old regime. The truth is, however, contrary to a popular perception both at home and abroad, he disliked that role and was ill-suited for it. Being a Party bureaucrat through and through, he could not imagine politics outside the Party, and he lacked a vision of a nonsocialist democratic future. Above all, his natural tendency was to solve problems by compromise, not by confrontation. Or, at least, this was what he understood as a “democratic way of solving problems, and he was extremely anxious to learn the tricks of democratic statesmanship at that stage.
As his closest associates later explained to me, it took them two months to persuade him to quit the Party in 1990 at the 28th Party Congress when hundreds of thousands across the country were already doing that without slightest hesitation. And it took them no less time to persuade him to lead the country into confrontation with the regime. But, once the hesitations were over, he performed with style and forcefulness in both cases. His appearance on television in February 1991 and his “declaration of war on the government” galvanized the country. By March practically all coal mines were paralyzed by strikes, while massive demonstrations in Moscow and other large cities were growing every day. A new momentum was given to the movement when half a million Moscovites defied the ban on demonstrations despite a display of military force. Even 50,000 of the best Army troops summoned to Moscow could not scare them any longer. After that, the tidal wave of revolution seemed to be unstoppable. By April the whole of Byelorussia went on strike. It was a nation which was not previously known for its rebellious spirit, and all indications were in evidence that the Ukraine was about to follow the suit. Clearly, the country was ready to break the shackles of communism and was indeed eager to do so. All it needed was a leader of national stature who was equally determined to lead it into battle.
This was a crucial moment in our history, one which will be studied by scholars in the years to come. For the first lime in almost seventy-five years of ruthless communist diktat, the Russian population was openly challenging it in a nonviolent but determined way. This popular impulse alone, uniting, as it were, all nations and social groups of the vast country was priceless in itself, for only those who regain their dignity can build a new society. No true recovery is possible for the downtrodden without such a moral victory, no true democracy can emerge unless they liberate themselves.
Moreover, oppositional structures, weak and inexperienced as they were after seventy-five years of repression, could grow into a real political force capable of displacing nomenklatura at all levels only as a result of a struggle in the process of confrontation with the old regime. Only then, as experience shows, does the logic of struggle restructures the whole fabric of the society, bringing forward the most capable organizers, the true leaders of the people, in every district and at every workplace. Only then is there a genuine political alternative. This is how nations are reborn. Without this process, there can be no structural support for new democratic power and, therefore, there can be no systemic change in a country.
In short, if we only had a true leader at that crucial moment of our history, the fate of Russia would have been quite different. All the difficulties of transition notwithstanding, we would have been well on the road to recovery, much like Eastern Europe. Alas, there was no such leader. Just as the things were coming to a head in April of 1991, Yeltsin lost heart and made a compromise with Gorbachev, later known as the “Novo-Ogarievo deal,” thus dumping the people’s fighting spirit, defusing the tension, and actually betraying his most faithful followers, the coal miners.
Worse than that, instead of relying on the people and making a clean break with the past, he allied himself with the “liberal” part of nomenklatura, thus creating what was later called a “center-left coalition”—the main reason for his inability to introduce much-needed reforms after August. Ironically, in doing this he promoted and strengthened his future “grave-diggers,” nominated his future enemy, Alexander Rutskoi, to be his running mate in the presidential elections, and forced the reluctant Supreme Soviet to elect yet another future enemy — Ruslan Khazbulatov, as its chairman. He was reduced to a mere figurehead, but he had no one to blame but himself. Those who mistrust the people should not play politics in time of a national crisis.
However, in all fairness to Yeltsin, we must add that, although his was definitely a decisive voice, he was by no means the only one scared by the prospect of confrontation in April. Most of the “democrats” as well as a sizable number of Moscow intellectuals, were scared, too. Only a few dared to publicly advocate a call for general strike or a campaign of civil disobedience. The rest were faking prudence, pointing out the danger of provoking a crackdown (as if it had not already started in January), or a military coup with its inevitable bloodbath, or even arguing—typically for intellectuals—that the people were not ready to answer such call (as if the strikes were not already spreading like wildfire). Instead, they were talking about the need to follow the Polish example of the “roundtable agreement’’ as if that example did not negate their own conclusion: It was a notorious mistake already recognized by the Poles themselves. Besides, at least Polish Solidarity was many millions strong, well-organized and came to the “roundtable” after surviving years of marital law. A “table” in Moscow in April of 1991 could be anything but “round.”
The post-August democracy in Russia was already doomed after April, four months before it was actually born. The people were ready to fight for it, but the “elites” were not, preferring a cozy cohabitation with communists to the power of the people, by the people, for the people.
Yeltsin’s First Hundred Days
Nevertheless, as if to confirm an old notion that reality is the best scriptwriter of the most improbable scenarios, fate gave them one last chance: the so called “August coup of 1991. Here is not the place to discuss what was it and why, but for the sake of our present discussion we should simply say that it was a blessing in disguise because it precipitated collapse of the communist system. One can only guess how long this demoralizing uncertainty would have dragged on otherwise, with intellectuals exercising their tongues about the wisdom off a “roundtable agreement” and the horrors of confrontation, and the West “saving” its dear friend, “Gorby.” So, as if to shame them all, the Evil Empire decided to strike back and fell apart, revealing how rotten it really was.
Suddenly, there was an opportunity to make up for the past indecision, but it required a very quick and radical action while the nomenklatura was still shell-shocked and the team was magnificent throughout the “coup” as well as for the first few days afterwards. Undoubtedly, climbing on a tank in front of his “White House” and appealing to the country was Yeltsin’s best hour, and signing a decree banning the Communist Party of the Soviet Union a few days later was the most significant act of his life. But that was it, and for the next hundred days he did absolutely nothing important as if paralyzed by his unexpected victory.
Meanwhile, this was the most crucial period. Although its backbone was broken, the old regime was still very much alive, particularly in the periphery. As in 1917, the August revolution triumphed in the center, mostly in the few large cities, while the provinces remained untouched. It happened so quickly that local bosses did not have time to reveal their support for the putsch, although more than 70 percent of them sympathized with it. On the other hand, the quick defeat of the “coup” also deprived democratic forces of time needed to consolidate and create their structures. In theory, therefore, they were bearing responsibility of a party in power, while in reality they had no power in the provinces. Yeltsin did nothing at all to promote them to power. Instead, he dispatched his personal “representative” to each district, usually a former bureaucrat who would quickly find a common language with the local bureaucracy.
But even in the center, where Yeltsin’s power was initially unchallenged, it was not enough just to seal the Party’s headquarters and to confiscate its property. The other parts of the totalitarianism machinery should have been dismantled as quickly as possible, including: the KGB, with its intricate system of secret agents; the monstrously oversized Army with its all too powerful industrial base; and the ministries, which still controlled every aspect of production and distribution in the country.
Above all, the very essence of the communist regime should have been completely delegitimized once and for all by a systematic exposure of its crimes, preferably in an open trial or a public inquiry in which all the relevant documents from the Party and the KGB archives could have been presented and publicized. What is more, there was no need even to invent a pretext for such an investigation, as many of the top communist leaders were already in jail awaiting a trial for their participation in the August “coup.” By simply making this investigation public, in front of television cameras, and by expanding the charges against the “plotters” beyond the “coup,” Yeltsin could have easily turned it into Nuremburg-type tribunal.
The task was to finish off the old structures of power and to create the new ones, thus shifting the power from the nomenklatura to the people. Needless to say, it also meant ending Yeltsin’s “center-left coalition” with the “liberal” part of nomenklatura, and that could have been achieved by new elections for the Supreme Soviet of Russia. All this, and much more, could have been easily achieved in the first hundred days after the August coup, while the terrified nomenklatura offered no resistance, and Yeltsin’s personal popularity was at its zenith.
One would think it was only too obvious that the unexpected success of August should have been broadened and built upon while the situation was so favorable. Above all, the most painful yet unavoidable reforms should have been proclaimed right from the start: first and foremost, a sweeping privatization of the simplest state property, such as housing, services, retail and wholesale trade. This move alone would have significantly broadened the social base of Yeltsin’s power, while establishing a key principle of private property in a country where it had been absent for nearly seventy-five years. No further market reforms were possible without introducing this principle and creating its legal basis. Besides, this would have replaced collapsing system of centralized state distribution in the country — the main reason for shortages and the main source of corruption—with normal market distribution. But it also would have provided a sizable part of the population with an instant reward, a tangible result of the revolution.
Combined with the purge of nomenklatura and with the reelection of the Russian legislature, this would have brought completely new people into positions of power, while removing the main obstacle to further reforms—the old legislature invented by Gorbachev in order to slow down the process of change. Instead of begging his enemies to vote themselves out of existence by adopting a new constitution and a law on privatization of land, Yeltsin could have created a new instrument of power for himself. At least, it would have made the post-August 1991 changes irreversible while significantly strengthening his position.
There was also an urgent need to extricate the country from its imperial past, and here again, Yeltsin was too hesitant if not ambiguous. Although he finally delivered a coup de grace to the Union in December of 1991, his vision of Russia’s future role in inter-republican relations was less than clear, leaving the ground for potential conflicts. The former republics were proclaimed independent and recognized as such in Moscow, but Russia claimed to be “legal heir” of the Soviet Union, with all the responsibilities for maintaining peace in the former empire. This was a colossal blunder. Not only did it make the Russian people—the biggest and the longest suffering victims of communism—the only parties held legally responsible for communism’s crimes, it also rendered impossible any significant reform of the huge Soviet armed forces, scattered as they were across the former empire, very often engaged in policing local ethnic conflicts.
Furthermore, it made the former Soviet Army a pawn in political chess game of republican leaders, most of whom, being former communist apparatchiks, desperately needed to obliterate that fact from the memory of their respective nations by “standing up to Moscow” and playing on the most primitive nationalist emotions of the crowd. Hence, the natural tension between Russia and the Ukraine over Crimea and the Black Sea fleet, as well as artificial tension between Russia and Georgia over Abkhasia and with Moldova over the Trans-dniestr “republic,” were encouraged to grow.
On the other hand, local warring parties of the numerous ethnic conflicts viewed the Soviet Army present there either as a source of military supplies, or as a potential ally should they manage to provoke its anger against their opponents in the conflict. More often than not, local Russian settlers would be made hostage in this cruel game, and this, in turn, fueled nationalist feelings while adding up to economic troubles in Russia by generating a stream of refugees to the mainland.
Finally, the Army commanders in the areas of the conflicts were often left to follow their own political instincts in dealing with the situation, and those instincts were not necessarily democratically-oriented. If nothing else, it was in their interest to prolong the conflicts as long as possible because it was perceived as the only guarantee against reduction of the armed forces and other unpleasant reforms.
It was clearly a recipe for disaster, a ticking time-bomb, and still is. The only solution for this potentially explosive problem would have been a refusal of the Russian leadership right from the start to be dragged into any conflicts outside of Russia, a quick withdrawal of all troops from non-Russian territories and a thorough restructuring of the armed forces. Politically, it could have been achieved only a unilateral withdrawal of Russia from the Union right after the August coup.
Of course, this is not to say that Yeltsin could have accomplished all those reforms in the remaining few months of 1991, but he certainly could and should have launched them, thus establishing the main fundamentals of his policy. The trouble is, he did nothing at all in those first hundred days, except shifting and shuffling the old bureaucratic deck. As a result, bureaucracy multiplied and completely overtook every sphere of the government, rendering it uncontrollable and incredibly corrupt. The absence of a government-sponsored radical program of privatization only gave the new bureaucracy the chance to “privatize” in its own corrupt ways. Former Party functionaries who, of course, all turned out to be “democrats” now, quickly became “businessmen,” grabbing more than their fair share of desirable state-owned properties in what was de facto “privatization.” Black-market operators and outright criminals got the rest, and the most valuable property was “privatized” without benefit of the law. This, of course, generated quite a predictable public resentment and gave a bad name to the whole idea of a market economy.
It also secured a financial base for the reviving nomenklatura. Political paralysis in the center gave it an opportunity to re-group and to work out a new strategy, this time a completely “democratic” one. There was no need for coups and conspiracies where sabotage and subversion could do the trick, particularly as the inevitable chaos, hunger, and breakdown of law and order were bound to play into their hand by bringing social tension to a peak. Yeltsin’s government, which was already rapidly losing its popularity because of its communist past and its corrupt present, could hardly be expected to survive such a course of events. All the communists needed to do under the circumstances was to act as a “democratic” opposition defending the interests of the ordinary people, while at the same time blocking or sabotaging any further reforms. Their domination of both the executive and the legislative branches of the government was already quite sufficient for winning this new game of “democracy.” Their new financial power, acquired through their “private business activity,” enabled them to create highly visible political structures.
Small and disunited though genuinely democratic forces could only continue to split and squabble under these circumstances and found themselves in a no-win situation. They could not openly oppose Yeltsin for fear of playing into the hand of the communists, yet they could not support him either without alienating their grass-roots followers. In the end, some joined the government, others dropped out of politics altogether, while a majority joined the ranks of the disillusioned multitudes, who felt betrayed and robbed of the fruits of their revolution.
Indeed, what else could they feel seeing exactly the same Party bureaucrats sitting in the same offices doing the same jobs and enjoying the same privileges as they did before August? What else could they feel when Yeltsin and his team, in a gesture of total disregard for popular feelings, moved their headquarters from the White House—a symbol of their revolution—to the former offices of the Communist rulers in the Kremlin, while their comrades’ blood still was not quite dried up on the pavement? Which Yeltsin were they supposed to support: the one who climbed a tank, now and then, to declare a war on the nomenklatura, or the one who advocated a compromise with it between his declarations of war? Surely, one cannot be expected to do both.
Only one hundred days after its victory, Yeltsin’s government looked more and more like the provisional government of 1917, with its inability to solve society’s main problems, its lack of political structures, and its dwindling popularity. It failed to capitalize on a few opportunities offered by good fortune because it was led by the wrong people who just happened to be at the right place in the right moment. There was nothing to hope for any longer. I wrote at the time, in the New York Times Magazine, after returning from Moscow: “The sad reality is that, seventy-four years later, we still haven’t gotten it right. While there were far too many revolutionaries in 1917, this time there are too few.”
Yegor Gaidar and His Reforms
As if all these blunders were not enough for one man to make in a few months, Yeltsin made yet another: Without resolving the problem of political power in the country and without establishing the institution of private property, he appointed Yegor Gaidar to introduce a “market economy.”
Ironically, very much like Mikhail Gorbachev before him, the new Russian star was immediately acclaimed in the West as a young, energetic, Westernized crusader for laissez fairs economics, while in reality he was the offspring of the old nomenklatura deadwood. His grandfather, a famous Soviet children’s writer, made himself a name by glorifying the Bolshevik Revolution and the Russian Civil War; his father, Soviet admiral, followed family tradition and glorified the bravery of the Soviet Army in Afghanistan. Needless to say, with such a prominent revolutionary pedigree, Gaidar III made a spectacular professional career in different think-tanks of the Central Committee, working on its main theoretical magazine, Kommunist, and later as the economics editor of Pravda. Incredibly, he was Yeltsin’s choice as Russian Prime Minister.
Gaidar’s team consisted of young, energetic liberal-minded children of the nomenklatura who spent their life in different prestigious research institutes. Undoubtedly, under Brezhnev, they were even perceived as somewhat rebellious for trying to persuade the old dogmatic Central Committee that socialism needed to incorporate some elements of market economy. I suspect they may have even read Milton Friedman, Ludwig von Mises, and Friedrich von Hayek secretly while students. The trouble was, however, that their knowledge of economic life was rather bookish, as they never lived lives as ordinary humans under socialism or capitalism.
Be that as it may, these “radical reformers” persuaded Yeltsin to adopt the Polish model of “shock therapy,” and to start the whole process with “liberalization of prices.” Right from the beginning of 1992 they did so, in a firm belief that, combined with tight monetary and fiscal policies, this measure would enable them to make the ruble convertible by summer and privatization possible by the fall.
The result was catastrophe. The “reforms” welcomed in the West as “courageous” in reality were downright stupid, because they totally ignored a colossal difference between the Russian and Polish economies. Polish agriculture was never collectivized and was always based on private farming. Private services and retail and wholesale trade already existed for decades before “shock therapy.” Russia had no private farmers, producers, or traders, and no private sector whatsoever. It did not even have a legal basis for private property. Accordingly, while “shock therapy” in Poland stimulated competition in the private sector, (employing about one-third of the total workforce), and, therefore, after an initial jump of some 60 percent, prices stabilized within a few months, prices in Russia jumped 20 times, and continued to grow. In the absence of a private sector and with shortages of consumer goods as common as ever, there was no competition to be stimulated: Monopolistic producers could safely reduce their production and fix the prices at any level. Needless to say, production dropped 20-30 percent everywhere, including in agriculture.
At the same time, Gaidar’s “tight monetary and fiscal policies”— after all, he learned something from Friedman’s books—severely discouraged any private initiative. With income taxes on a Swedish scale, (federal and local taxes combined could reach 90 percent), and an absence of cheap credits, any enthusiast of a private business activity was promptly driven underground, where shady deals were made only in cash (to the utter delight of the racketeers). Naturally, this “business activity” could never go beyond simple profiteering in an atmosphere of bureaucratic corruption, raging inflation, high taxes and racketeering. No one would be so crazy as to “invest” into any production in such circumstances, particularly in a country with no laws on private property.
Consequently, private initiative was directed into wasteful activity instead of being harnessed to develop a market economy: It did not accumulate capital, engage in competition, or create new jobs and new products. It did not even contribute its share to the general revenue, but it did fuel inflation, crime, and a popular hatred of “ugly capitalism.”
Meanwhile, unlike in Poland, the bulk of Russian industry was not consumer-oriented, but state-controlled ‘‘heavy industry,” some 30-40 percent of which was related to military production. Any market reform in the country was bound to affect it dramatically, generating a huge wave of unemployment, Now, since no government can survive unemployment of such proportions, least of all as feeble a government as Yeltsin’s, market reforms in Russia were possible only with a very rapid development of the private sector, capable of creating new jobs. Even that might have been insufficient, and a program of public works, like the one under FDR in the United States, should have been prepared.
But neither was conceived. Suddenly, a combination of Gaidar’s “tight monetarism” of staggering inflation and of the underground “cash economy” resulted in a liquidity crisis, or, as it was officially termed in Russia, a “crisis of payment.” To put it in plain language, the Russian economy went bankrupt: No one could pay anyone because of a lack of cash. Enterprises could not pay for raw materials, for energy, for services, for products provided by connected enterprises; workers were not paid their wages for several months. Mutual debts piled up and reached a total of several trillion rubles, while only few years before, in 1989, the entire national income of the then Soviet Union was assessed at under one trillion rubles.
Fortunately for all involved, there were no laws on bankruptcy either—the Congress of People’s Deputies previously refused to adopt any — or the government would have had to deal with 30-40 million unemployed and very angry people. Still, there were a few hair-raising moments, such as when a nuclear weapons factory in Siberia went on strike, and Yeltsin personally had to bring the workers money in his plane in order to pay their overdue wages.
But this was the end of Gaidar’s “reform.” By the summer of 1992, instead of the promised convertible ruble, the government had to print the ordinary one in astronomic numbers. Under pressure from furious legislators, the government also had to re-establish massive subsidies of industry and periodic indexation of wages and pensions. It restored Gorbachev’s old economic “policy” of the printing press and of begging additional credits in the West. To be sure, there was still plenty of talk about reforms and even a half-hearted attempt at “privatization” in the fall, “as planned.” Indeed, the “Privatization Cheques,” or “vouchers” as they are more commonly known in Russia, with a face value of 10,000 rubles each, were duly printed and distributed to every Russian citizen. But the popular response was lukewarm: No one knew what sort of the state property would be available for “vouchers.” Would it be something useful, like land or housing, or would it be a tiny piece of a gigantic and rusty factory, which would never be profitable? Meanwhile, the “vouchers” simply added yet another trillion or so rubles to an already uncontrollable rate of inflation as they went into circulation and became legal tender in Russia.
“Market reform” ended in Russia, leaving people twenty times poorer, more disillusioned and more angry. It could not serve the communists better: While the country still had neither democracy, nor a market economy, both ideas were utterly discredited. The outrageous robbery of Yeltsin’s first one hundred days completely obliterated from the people’s memory the crimes and oppression of the previous seventy-five years. Encouraged, the nomenklatura went onto the offensive, gradually forcing Yeltsin, first, to abandon his policies, then, to sacrifice his team, and, finally, to fight for his own political survival while his constant vacillations between confrontation and compromise only decreased his popularity.
Is There Hope for Russia?
Clearly, new forces, new people—preferably, a new generation—must come to the Russian political scene, if the country is to survive. Yet, there are no new forces, and the existing ones are not strong enough to resolve the crisis. This is exactly the reason why the most commonly suggested scenarios of the Russian future—the Bolshevik coup of 1917 type, the Weimar Republic with a new Hitler emerging out of its chaos type, the military coup of the Pinochet type or an all-out Civil War type as in the former Yugoslavia—are not likely to happen. For if there were forces capable of carrying out any of the above scenarios, they would have won long ago, or, at least, they would have manifested themselves in a convincing way. For instance, look at the present day “Bolsheviks" and at all of yesterday’s apparatchiks: Are they eager to take upon themselves the responsibility of absolute power? Far from it; they prefer Yeltsin and his lot to bear responsibility, while they line their pockets. And how many followers do they have in the country, if even at the time of a profound economic crisis and misery they could hardly gather a 100,000-strong demonstration in Moscow?
Or, let us look at the Russian “nationalists,” so much publicized in the West as if they were just about to storm the Kremlin. Where are their “black hundreds’’? In all these years of turmoil and with all the trappings of Weimar Republic in evidence, they failed to get a single deputy elected even to a local Soviet anywhere in the country in the early 1990s. In fact, they were hardly more numerous than the skinheads in any European country. This is why they had to ally themselves with the communists in what became known as a “brown-red coalition”: both partners of this unhappy marriage knew they were too weak to survive alone.
Military dictatorship is even a less likely scenario. Long gone are the days when the Army was a monolithic force, forged by discipline into an iron fist of the Party. Today’s Russian Army is a force only in name. It is torn by its internal problems and conflicts. The conscripts want to go home; the junior officers want better housing and salaries; the generals want to play soldiers who, in turn, want to go home. Add ethnic conflicts, corruption, abuse, and total political confusion, like anywhere else in the country, and the emerging picture is a one of a liability rather than of an all-powerful force.
Besides, none of the above mentioned “forces” has the slightest idea how to solve the country’s problems. Their usual demagoguery apart, even the communists know there is no way back to five-year plans and campaigns of “socialist competition.” Even the most extreme nationalists know that there is no way back to the Soviet empire without a prolonged and bloody war for which Russia has no strength. And, after bungling their reforms, the democrats have no clear answers either.
Meanwhile, as political paralysis in the center continues, with tiny groups of politicians in Moscow being deadlocked in their squabbles, and with the government printing more and more money, the provinces are very likely to look for their own solutions. In fact, fragmentation of Russia proper has already started, and not necessarily along ethnic lines. Some districts, in their desperate quest for stability, have introduced local “currency” as a buffer against an inflationary ruble; others have openly contemplated a separation from the Russian Federation. Perhaps this is as it should be in a state that has been historically built from top to bottom rather than from the bottom to the top. Perhaps there is no other solution for a country where the development of local self-government has been prevented for nearly seventy-five years. Indeed, can anyone explain why Siberia, or the Far East, while still fabulously rich in resources, should continue to suffer just because nine time-zones away in a far-off Moscow some fools are squabbling over obscure constitutional subtleties? What did Moscow ever give to them, except orders, plans demands, punishment, taxation, and now hyperinflation?
Undoubtedly, a drive for “sovereignty” was the most powerful force of the current Russian revolution, and not only among different ethnic groups. In fact, it might have been the only popular concept of freedom in the over-centralized totalitarian state—a desire to be separated from it by some kind of a border, preferably by an iron curtain. This, and not a handful of former communists-turned-democrats, effectively finished off totalitarian control, thus making the country ungovernable. The idea of a self-sacrifice for a common good has been so over-exploited under socialism that it has produced a powerful backlash. In a country, where everyone has been an employee of the state, a bureaucrat of a sort, the universal dream has been to become a boss of one’s own. And, if my guess is correct, no common idea or common cause can unite them until they fulfill this dream, ruin the country, and again learn to voluntarily subordinate themselves to a common interest. This will be the most difficult lesson of democracy they have yet to learn.
In the meantime, we should brace ourselves for all sorts of disasters. Clearly, even large fragments of the former Soviet empire will not be able to maintain a national infrastructure in communications, transportation, and energy to say nothing of maintaining the safety of nuclear and chemical industries. There is also little likelihood of maintaining the Academy of Science with its research institutes, and the artistic culture that has arisen over hundreds of years. In fact, Russia may be thrown two centuries back, into the age of horse-power, with its entire intellectual potential being completely lost.
Furthermore, we cannot predict how the fragments of Russia are going to be governed: by elected parliaments or by warlords? Will they live peacefully with each other, or will they fight for oil fields and gold resources? And, if they fight, what sort of weapons will they use?
Questions like these are as yet unanswerable. The biggest among them is: What can we do about it? Even today, the West can do next to nothing, no matter how much it wants to “help Yeltsin.” A few billion dollars more is not going to make much difference, particularly as most of this sum will be embezzled by the corrupt Russian bureaucracy anyway. But when the country disintegrates, we will be even less able to help it.
So, what can we do? Is there hope for Russia? Yes. But it rests with the younger generation, which so far has remained largely inactive and apolitical. This is without precedent in the world’s history. Most of them are so mistrustful of their elders that the overwhelming majority— some 70 percent according to opinion polls, wants simply to emigrate. Unless we find a way to wake them up, to give them hope, there will be no hope for Russia.
Champions of Freedom: Can Capitalism Cope? Free Market Freedom in the Post-Communist World, Hillsdale College Press, 1994.