The referendum held in Russia this past April has left President Boris Yeltsin in office, which is better than his defeat would have been, but it has done nothing to resolve the ongoing crisis which has caused so much panic both in Western capitals and in Russia itself.
A few months ago, when the crisis once again hit the news, some hastened to announce what had always been expected and feared, yet would, it had simultaneously been hoped, be averted by a miracle: the death of the fragile democratic system which had been born in Russia after the failed coup of August 1991, the fall of Mikhail Gorbachev, and the accession of Boris Yeltsin to power. Others argued that democracy in Russia had been stillborn right from the start, or even that it had never quite been a democracy. Most even likened the change to what had happened 75 years earlier, when the Provisional Government, which had taken power after the Czar’s abdication, was overthrown by the Bolsheviks.
Needless to say, historical parallels are more often misleading than enlightening. While Yeltsin’s leadership could indeed be compared with the Provisional Government of 1917, being weak and indecisive, the present-day “Bolsheviks” are but a pale copy of Lenin’s professional revolutionaries. They are the defeated forces of the past, not the harbingers of the future.
What, then, has been happening in Moscow? Nothing much, in my view, except that it has become apparent even to Yeltsin’s supporters that they have wasted the few opportunities offered by the August 1991 godsend.
The formidable problems of transition from decades of Communist totalitarianism to a market economy and democracy are obvious. Under Communism both agriculture and industry were monopolistic and inefficient in their very design; there was a huge military-industrial complex; there was a lack of investment capital; there were depleted resources; and there were masses of low-skilled laborers who had never worked productively in their lives. Clearly, any attempt, no matter how gradual and cautious, to restructure an economy like this was 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 would likely survive such a reform, as no elected government could have created such an economy in the first place.
Moreover, emerging from the totalitarian nightmare, Russia had no political or social structures capable of stabilizing it in transition except those created by the totalitarian system itself and tainted by it. The new institutions, although numerous and noisy, were tiny and weak to the point of merely symbolic existence. They were no match for the well-entrenched, all-pervasive structures left over from the old regime and interconnected into a virtual mafia; they were even too small to replace the governing apparatus. Hence the old ruling bureaucracy, the nomenklatura—eighteen million strong according to some estimates and united by its vested interests, its connections with the West, its accumulated wealth, and its complicity in the crimes of the past—remained in control of all the executive functions of the presumably new democratic state.
Add to all this endless ethnic conflicts, fantastic corruption, skyrocketing crime rates, and the general apathy of a demoralized population, and the chances of a successful transition became all but impossible.
Also, let us not forget the less than friendly attitude of the West to the attempt at establishing democracy in the former Soviet Union. While those who, like Gorbachev and his lot, strove to rescue the moribund Communist system and the equally doomed Union were given every assistance (including financial support to the tune of $45 billion!), their democratic opponents—including Yeltsin—were vilified right from the start as “unpredictable,” “unbalanced,” or even “dangerous.” This only served to prolong the country’s agony, and to make the task of transition more and more difficult.
Yet formidable as all these obstacles were, there might still have been a chance of success if they had not been reinforced by a series of colossal blunders ironically made by Yeltsin and his team.
Even before the coup, and certainly by the end of 1990, it had become abundantly clear that the Soviet regime was heading for a catastrophe. While Gorbachev’s perestroika had failed to deliver what was expected of it by its architects, it did unleash forces which were eroding the foundations of the regime. The Soviet empire was in turmoil, and all the “captive nations” were rising up and demanding independence. In Russia itself, elections at all levels, restricted and manipulated though they were, showed a clear vote of no confidence in the Communist party. A wave of strikes was gathering momentum, threatening to grow into a general strike and to lead to the formation of a Solidarity-type labor union.
Clearly, a program of reform that did not go far enough for economic revival was going too far for the regime’s political survival; what was intended as a limited within-the-system readjustment was bidding fair to develop into a popular revolution.
But it was also becoming clear that the regime was prepared to defend itself. Between 1988 and the end of 1989, the most radical parts of perestroika, such as the deregulation of prices and further decentralization, were suspended. New laws were hastily introduced curbing freedom of assembly, limiting freedom of the press, restricting cooperatives, and, above all, extending to the army the power of the police. Then came new emergency laws banning strikes, more restrictions on cooperatives, and a decision to increase the number of internal troops. Everything seemed ready for a crackdown, and indeed, in Tbilisi (1989) and Baku (1990), Gorbachev showed that he was quite prepared to spill blood even in response to peaceful political developments which threatened to evolve into independence.
In December 1990, Gorbachev replaced most of his reform-minded associates with obvious thugs. He then proceeded to curtail glasnost, order a campaign against private business activity, institute measures that robbed old-age pensioners of their life savings, and shed yet more blood, this time in the Baltic states.
In February 1991, Yeltsin, who had recently quit the Communist party, went on television with a “declaration of war on the government.” This galvanized the country. By March, practically all coal mines were paralyzed by strikes, and demonstrations in the large cities were growing more massive every day. In Moscow half-a-million people defied the ban on demonstrations despite a display of military force; not even 50,000 of the best troops summoned to the city could frighten them any longer.
After that the tidal wave of revolution seemed to be unstoppable. In April, the whole of Byelorussia—a nation not previously known for its rebellious spirit—went on strike, and all indications were that Ukraine was about to follow suit. Clearly, the country was ready and eager to break the shackles of Communism. All it needed was a leader of national stature, equally eager to carry it into battle.
This was a crucial moment in the history of the Soviet Union, one which will be studied by scholars in the years to come. For the first time in almost 75 years of ruthless Communist rule, the people were openly challenging the regime in a nonviolent but forceful way. This popular impulse, uniting all nations and social groups in a determination to regain their dignity and liberate themselves, was priceless. It meant that the preconditions for building a new society and a true democracy were there.
But these preconditions, though necessary, were not sufficient. The oppositional structures, weak and inexperienced as they were in their emergence after 75 years of repression, needed to go through the process of struggle with the old regime if they were to grow into a real political force capable of displacing the nomenklatura at all levels. Such a struggle would bring forward the most capable organizers, the real leaders, in every district, at every workplace, thereby creating a genuine political alternative. Without this process there could be no structural support for a new democratic system and no systematic change in the country.
Yet just as things were coming to a crunch in April 1991, Yeltsin, by now the only credible leader of the opposition, lost heart and—perhaps following his instincts as a lifelong bureaucrat—entered into a compromise with Gorbachev which actually betrayed his most faithful followers, the coal miners. Worse yet, instead of relying on his popular base and making a clean break with the past, Yeltsin allied himself with the “liberal” part of the nomenklatura, creating what was later called a Center-Left coalition. Ironically, in doing this he also nominated his future enemy Aleksander Rutskoi to be his running mate in the June presidential elections—which he would, of course, go on to win, becoming the first freely elected President of Russia—and forced a reluctant Supreme Soviet to choose yet another future enemy, Ruslan Khasbulatov, as its chairman.
However, in all fairness to Yeltsin, it must be added that, although his was definitely the decisive voice in April, he was by no means alone in being frightened by the prospect of confrontation. Most of the democratic forces were scared too, and so was a sizable portion of the intellectuals of Moscow. Only a few dared to call for a general strike or a campaign of civil disobedience. The rest pointed to the danger of a crackdown (as if it had not already started in January), or a military coup with its inevitable bloodbath, or even argued—typically for intellectuals—that the people were not ready to answer such a call (as if strikes were not spreading already like wildfire). The best course, they said, was to follow the Polish example of the “round-table agreement” between Solidarity and the Communists (as if that had not been a notorious mistake already recognized as such by the Poles themselves).
In short, the country was ready to fight for democracy, but the elites preferred a cozy cohabitation with the Communists to the power of the people, by the people, for the people. Going along with this policy was Yeltsin’s first major blunder.
Nevertheless, and as if to confirm an old notion that reality is the best scriptwriter of the most improbable scenarios, fate gave Yeltsin and his supporters one last chance: the so-called August coup, which turned out to be a blessing in disguise because it precipitated the collapse of the Communist system. One can only guess how long the demoralizing uncertainty of those days would otherwise have dragged on, with intellectuals exercising their tongues about the wisdom of a round-table agreement and the horrors of confrontation, and the West frantically trying to save its dear friend Gorby. But as if to shame them all, the Evil Empire decided to strike back and then fell apart, revealing how rotten it really was.
So, all of a sudden, there was an opportunity to make up for past indecision. But taking advantage of this opportunity required very quick and radical action while the nomenklatura was still shellshocked and popular enthusiasm was at its height. And indeed, Yeltsin’s team was magnificent throughout the coup as well as for a few days after it. Undoubtedly, climbing on a tank in front of his White House and appealing to the country was Yeltsin’s finest hour, just as, a few days later, signing a decree banning the Communist party of the Soviet Union was the most significant act of his life.
But that was it. For the next 100 days, as if paralyzed by his unexpected victory, he did absolutely nothing of any importance.
Although its backbone had been broken, the old regime was still very much alive. As in 1917, the August revolution had triumphed in the center, mostly in the few big cities, while the provinces remained untouched. The coup collapsed so quickly that the democratic forces had no time to consolidate and get rid of the local bosses. In theory the democrats were the party in power, but in reality they had no power in the provinces—and Yeltsin did nothing to change this.
Even in the center, where Yeltsin’s own power had initially been unchallenged, it was not enough just to seal the party’s headquarters and to confiscate its property. The other parts of the totalitarian machinery needed to be 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. Above all, the very essence of the Communist regime should have been delegitimized once and for all by a systematic exposure of its crimes, preferably in an open trial or a public inquiry where the relevant documents from the party and the KGB archives could have been presented and publicized through the media.
In other words, the task was to finish off the old structures of power and to create new ones. Needless to say, this required ending Yeltsin’s alliance with the “liberal” sector of the nomenklatura through new parliamentary elections. All this, and much more, could easily have been done in the first 100 days after the August coup, when the frightened nomenklatura could offer no resistance and Yeltsin’s personal popularity was at its highest point.
For example, the most painful yet unavoidable reforms could and should have been inaugurated 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 broadened the social base of Yeltsin’s power, while simultaneously establishing the key principle of private property without which no further market reforms were possible. Besides, introducing this principle would have meant replacing the collapsing system of centralized state distribution—the main reason for shortages and the main source of corruption—with a normal market distribution. And it also would have provided a sizable portion of the population with an instant reward, a tangible result of the revolution.
These measures, combined with a purge of the nomenklatura and with a newly elected Russian legislature, would have brought new people into positions of power, while removing the main obstacle to reform—the old legislature Gorbachev had invented precisely in order to slow down the pace of change. Instead of begging his enemies to vote themselves out of existence by adopting a new constitution and a law on the privatization of land, which is what he did, Yeltsin could have created a new instrument of reform for himself. At the very least, this would have made the post-August changes irreversible and it would also have significantly strengthened his own position.
Then, too, there was an urgent need to extricate Russia from its imperial past, and here again Yeltsin was too hesitant, if not ambiguous. Although he finally delivered the coup de grâce to the Union in December 1991, his vision of Russia’s future relations with the newly independent republics was less than clear, opening the way to potential conflicts.
Thus, on the one hand, the republics were proclaimed independent and recognized as such in Moscow, but on the other hand, Russia claimed to be the “legal heir” of the Soviet Union, with responsibility for maintaining peace in the former empire. This was another colossal blunder. Not only did it make the Russian people legally responsible for the crimes of Communism—of which they had been the biggest and longest-suffering victims; it also made impossible any significant reform of the huge Soviet armed forces, scattered as they were across the former empire and very often engaged in policing local ethnic conflicts.
Worse yet, local warring parties to the numerous ethnic conflicts viewed the Soviet troops stationed in their midst either as a source of military supplies or as a potential ally (should they manage to provoke the army’s anger against their opponents in the conflict). More often than not, local Russian settlers would be made hostages in this cruel game. This, in turn, fueled nationalist feelings in Russia, and also added to its economic troubles by generating a stream of refugees to the homeland.
Finally, the army commanders in the areas of conflict were often left to follow their own political instincts, and those instincts were not necessarily democratically oriented. If nothing else, it was in their best interest to prolong the conflicts as much as possible because this was perceived as the only guarantee against a reduction of the armed forces and other unpleasant reforms.
The only way to avoid these potentially explosive problems would have been a refusal by Yeltsin 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. All this could have been achieved by a unilateral withdrawal of Russia from the Union immediately after the August coup. But Yeltsin took no such step.
Of course, this is not to say that Yeltsin could have pushed through all these reforms in the remaining months of 1991. But he certainly could and should have launched them in those first 100 days, thereby establishing the fundamental lines of his policy. Instead, all he did was shift and shuffle the old bureaucratic deck.
As a result, the bureaucracy multiplied and took over every sphere of the government, rendering it uncontrollable and incredibly corrupt. Indeed, the absence of a government-sponsored radical program of privatization gave the bureaucracy a chance to “privatize” in its own way. Former party functionaries, who of course all turned out to be “democrats” now, quickly became “businessmen” as well, grabbing many desirable state-owned properties in this de-facto “privatization.” Black-market operators and outright criminals got the rest. Not only did this generate public resentment, it also gave a bad name to the whole idea of a market economy.
Thanks to its new financial base and Yeltsin’s political paralysis, the reviving nomenklatura was able to regroup and to work out a new strategy, this time a completely “democratic” one. There was no need for coups and conspiracies. All the old Communists had to do was to act as a “democratic” opposition defending the interests of ordinary people, while at the same time blocking or sabotaging any further reforms. Since they dominated both the executive and the legislative branches of the government, they were bound to win this new game of “democracy.”
As for the small and disunited democratic forces, finding themselves in a no-win situation, they could only continue to split and squabble. They could not openly oppose Yeltsin for fear of playing into the hands 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, and a minority 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 holding the same jobs and enjoying the same privileges as they had before August? Which Yeltsin were they supposed to support: the one who climbed a tank now and then to declare war on the nomenklatura, or the one who, between his declarations of war, advocated compromising with the nomenklatura?
Only 100 days after its victory, then, Yeltsin’s government—with its inability to solve the main problems, its lack of supporting political structures, and its dwindling popularity—was looking more and more like the Provisional Government of 1917.
As if all these blunders were not enough for one man to commit in a few short months, Yeltsin added yet another: without resolving the problem of political power in the country, and without first establishing the institution of private property, he appointed a certain Yegor Gaidar to introduce a market economy.
Ironically, very much like Mikhail Gorbachev before him, this new Russian star was immediately acclaimed in the West as a young, energetic crusader for the market economy, while in reality being an offspring of the old nomenklatura deadwood. His grandfather, a famous Soviet children’s writer, made his name by glorifying the Bolshevik Revolution; his father, a Soviet admiral, followed family tradition by glorifying the bravery of the Soviet army in Afghanistan. Needless to say, with so prominent a revolutionary pedigree, Gaidar the 3rd enjoyed a spectacular professional career in different think tanks of the Central Committee, such as its main theoretical magazine Kommunist, and later became the economics editor of the newspaper Pravda. Surely, with such impeccable credentials as a Westernizer, he was the obvious choice for prime minister of Russia.
His team, too, consisted of young, energetic, liberal-minded children of the nomenklatura who had spent their lives in prestigious research institutes. No doubt under Brezhnev they had even been perceived as somewhat rebellious for trying to persuade the old dogmatic Central Committee that socialism could be improved upon with some elements of a market economy. I suspect they may even as students have secretly read Milton Friedman and F.A. Hayek. The trouble was, however, that their knowledge of economic life was entirely bookish, as they had never lived the life of an ordinary human being either under socialism or under capitalism.
It was these radical reformers who persuaded Yeltsin to adopt the Polish model of “shock therapy,” and to start the whole process with the “liberalization of prices.” They firmly believed that this, combined with tight monetary and fiscal policies, would enable them to make the ruble convertible by the summer of 1992 and to begin privatization by the fall. After all, that was what had happened in Poland, was it not?
The result was a catastrophe. The reforms, welcomed in the West as courageous, were in truth downright stupid because they totally ignored a huge difference between the Russian and Polish economies. Polish agriculture had never been collectivized and was therefore always based on private farming; moreover, both retail and wholesale trade had already existed in Poland for decades. Accordingly, shock therapy there stimulated competition in the private sector (employing about one-third of the total workforce), and after an initial jump of some 60 percent, prices stabilized within a few months.
Russia, in sharp contrast, had no private producers or traders, no private sector whatsoever, not even a legal basis for private property. Under these circumstances there was no competition to be stimulated: monopolistic producers could safely reduce their production and fix prices at any level. Not surprisingly, production, including in agriculture, dropped everywhere by 20-30 percent, and prices jumped 20 times, and continued to go up.
At the same time, Gaidar’s tight monetary and fiscal policies—he had 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 credit, any enterprising entrepreneur was promptly driven underground, where shady deals were made only in cash (to the utter delight of the racketeers).
Thus was private initiative directed into wasteful activity instead of being harnessed to a productive market economy. Such business activity did not accumulate capital, did not engage in competition, did not create new jobs or new products; it did not even contribute its share of taxes. But it did fuel inflation, crime, and a popular hatred of “ugly capitalism.”
Another difference from Poland was that the bulk of Russian manufacturing was not consumer-oriented but state-controlled heavy industry, some 30-40 percent of which was related to military production. Any market reform was bound to affect it dramatically, generating a huge wave of unemployment. Now, since no government can survive unemployment at such a level, least of all a government as feeble as Yeltsin’s, market reforms in Russia needed to be accompanied by 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 Roosevelt in the United States, should have been prepared.
But neither of these points was taken into account. So, suddenly, a combination of Gaidar’s tight monetarism, staggering inflation, and the underground cash economy brought about a liquidity crisis. To put it in plain language, the Russian economy went bankrupt. Enterprises could not pay for raw materials, for energy, for services, for products provided by suppliers; workers were not paid their wages for several months. (When a nuclear-weapons factory in Siberia went on strike, Yeltsin personally had to bring the overdue wages in his plane.)
By the summer of 1992, instead of the promised convertible ruble, the government had to print the ordinary one in astronomical numbers. Under pressure from furious legislators, Yeltsin had to return to massive subsidies of industry and to periodic indexation of wages and pensions—that is, to Gorbachev’s old economic “policy” of a printing press and of begging additional credits in the West.
To be sure, there was still plenty of talk about reform, and even a half-hearted attempt at “privatization” in the fall, “as planned.” The privatization vouchers, 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 state property would be available for the 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 turn a profit?
Meanwhile, the vouchers simply added yet another trillion or so to the already uncontrollable inflation as they went into circulation and became yet another legal tender. By the end of 1992, their market price had dropped to 2,000 rubles apiece.
Thus ended Gaidar’s “market reform,” leaving people twenty times poorer, disillusioned, and angry. Such a reform could not have served the Communists better: though the country still had neither democracy nor a market economy, both ideas were now utterly discredited.
Clearly, new forces, new people—preferably, a new generation—will have to enter 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 that none of the most commonly suggested scenarios of the Russian future—a Bolshevik coup of the 1917 type; a Weimar-type Republic with a new Hitler emerging out of its chaos; a military coup of the Pinochet-type in Chile; or an all-out civil war as in the former Yugoslavia—is likely to happen. For if there were forces capable of carrying out any of those scenarios, they would have won long ago, or at least they would have manifested themselves in a convincing way.
Take, for example, the present-day “Bolsheviks”: are they eager to assume the responsibility of absolute power? Far from it. They prefer Yeltsin and his lot to bear responsibility while they go on lining their pockets.
Or look at the Russian nationalists, 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 a Weimar Republic in evidence, they have failed to elect a single deputy to even a local Soviet anywhere in the country. In truth, they are 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 recognize that they are too weak to survive alone.
Military dictatorship is an even less likely scenario. Long gone are the days when the army was a monolithic force, forged by iron discipline into an iron fist of the party. Today’s Russian army is being torn apart by its internal problems and conflicts. The conscripts want to go home, the junior officers want better housing and salaries, and only the generals want to play soldier. Most of the local commanders prefer to keep their troops locked up in the barracks. One dreads even to think what would happen if, indeed, some dotty general attempted a coup: whom this marauding gang of an army would shoot at is anyone’s guess.
Besides, none of the above-mentioned forces has the slightest idea of how to solve the country’s problems. Their usual demagoguery aside, the Communists know there is no way back to five-year plans and campaigns of “socialist competition.” The most extreme nationalists know that there is no way back to 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.
As the center remains paralyzed, with tiny groups of politicians in Moscow deadlocked in their squabbles, and with the government printing more and more money, the provinces are very likely to look for their own solutions. Actually, the fragmentation of Russia proper has already started, and not necessarily along the ethnic cracks. Some districts, in their desperate quest for stability, have introduced local currency as a buffer against the inflated ruble; others are openly contemplating a separation from the Russian Federation. And the army may follow their lead, providing regional politicians with the muscle and, in return, being provided with the supplies Moscow can no longer give it.
Perhaps this is as it should be in a state which was historically built from top to bottom rather than from the bottom to the top. Indeed, can anyone explain why Siberia, still fabulously rich in some resources, should continue to suffer just because, nine time zones away, in far-off Moscow, some fools are bickering over obscure constitutional subtleties? What did Moscow ever give to Siberia except orders, punishment, taxation, and now hyperinflation?
Undoubtedly, the drive for sovereignty was the most powerful force of the latest Russian revolution, and not only among the different ethnic groups. In fact, the idea of sovereignty may have represented the only popular understanding of freedom in the overcentralized totalitarian state—a desire to be separated from it by some kind of border, preferably by an iron curtain. It was this desire, and not a handful of former Communists-turned-democrats, that effectively finished off totalitarian control.
Obviously, if the country breaks apart, even its large fragments will be unable to maintain the national infrastructure in communications, transportation, energy, to say nothing of the safety of nuclear or chemical facilities. Nor will they be able to maintain the Academy of Science with its research institutes, or the artistic culture accumulated in the last couple of centuries.
Furthermore, we cannot predict how those fragments of Russia will be governed: by elected parliaments or by warlords? Will they live peacefully with one another, or will they fight for oil fields and gold resources? And if they fight, what sort of weapons are they going to use?
In sum, we are faced with all kinds of as yet unanswerable questions. And the biggest among them is: what can we do about it? So far as the West is concerned, we do have an answer—next to nothing. Even today, no matter how much it wants to help Yeltsin, a few billion dollars more will not make much difference, particularly as most of this sum will be embezzled by the corrupt Russian bureaucracy anyway. And when the country disintegrates, the West will be even less able to help.
The only chance of renewal rests with the younger generations which have remained completely inactive and apolitical throughout the current revolution—a fact without precedent in the world’s history. Most of these young people are so mistrustful of their elders that the overwhelming majority of them—some 70 percent according to the opinion polls—want simply to emigrate. Unless a way can be found to wake them up, to give them a hope and a cause, there will be no hope for Russia either.