The Decline and
Fall of Soviet Communism
1964-1999
The Last of Stalin’s Protégés
·
In what ways did Leonid Brezhnev
reverse the political liberalization of the Khrushchev era?
·
Describe how defense spending
affected the Soviet economy and foreign policy.
·
Describe the economic problems
that the Soviet Union experienced in the 1970s
and 1980s.
·
Describe the frustrations of
ordinary life for Soviet citizens. In
what ways did they cope with these frustrations?
·
What were the positive elements of
the Soviet system?
·
In what ways did Yuri Andropov
attempt to reform the Soviet system? Why
did he fail?
After Khrushchev’s “retirement” in 1964, Leonid Brezhnev and Aleksei
Kosygin continued the rule of Stalin’s aging protégés. For the first ten years the two men split
power, with Brezhnev acting as General Secretary of the party and Kosygin as
the head of the government; however, with a new constitution passed in 1977
that established the position of president, Brezhnev became viewed as the
singular leader of the country.
Brezhnev moved swiftly to stamp out any hint of reform,
both within the USSR
and in the satellite nations of Eastern Europe. In 1965, two prominent writers were arrested
for publishing articles critical of the USSR
abroad. The writer Aleksandr
Solzhenitsyn, who had been permitted to publish his novel on the gulag during
the Khrushchev Era, continued to write critical assessments of Soviet society
and was denied permission to accept the Nobel Prize for Literature in
1970. Eventually the Brezhnev
government, unwilling to endure the likely worldwide outrage at the arrest of
the prominent writer, expelled him in 1974, making him the first man since
Trotsky to be forcibly exiled from the USSR. Anti-Soviet literature was driven underground
as intellectuals distributed privately printed articles and books, known as samizdat,
which were reduplicated and passed along like chain letters. In the “Prague Spring” of 1968, the head of
the Communist Party in Czechoslovakia,
Alexander Dubcek, lifted press
censorship and allowed non-communist political groups to form, promising to
create “Socialism with a human face.” When numerous Soviet efforts to force Dubcek
to reverse his course failed, Brezhnev sent in tanks to crush what he perceived
as a major threat to communist rule.
Unlike Hungary
twelve years before, resistance to the Soviet invasion was not as violent and
the revolt was quickly ended. Dubcek
escaped execution and was merely shifted to an obscure position as a mechanic
in charge of maintaining machinery for the Slovak Forestry service. Under the Brezhnev Doctrine, the Soviet Union pledged
to use military force to prevent the overthrow of any communist
government. In 1979 this doctrine was
used to send Soviet troops into Afghanistan,
an effort that soon became as unpopular in the USSR
as the Vietnam War had been in the United States
a decade before.
In the late 1960s, Brezhnev attempted to gain complete
military equality with the United States. During his rule, the Soviet Union
built a powerful, global navy and achieved a position of nuclear parity
(equality) with the United States. Eventually, however, this military
competition began to erode the Soviet economy.
To compete with a country of far greater wealth, the USSR
was forced to devote more and more of its resources to the military. By the mid-1970s, the Soviet Union
was spending twice the percentage of its GNP (estimated at between 15-30%) on
the military than did the United States. In addition to the cost of the military competition,
the USSR also
became concerned with U.S. President Richard Nixon’s overtures to China. As a result, Brezhnev began to pursue a
policy of détente (lessening of
tensions) with the United States,
hoping to slow down the nuclear arms race.
In 1972, he signed an historic agreement to limit nuclear weapons with
Nixon, known as SALT (Strategic Arms Limitation Treaty).
While the USSR
gained a position of military parity with the U.S.
in the 1970s, its civilian economy began to stumble. The long-standing agricultural crisis grew
steadily worse, and the Soviets spent huge amounts to import grain from abroad
to cope with food shortages at home. Especially maddening to Soviet leaders was
the extraordinary amount of crops that rotted in the fields or en route to
market due to poor transportation.
Private plots worked by peasants after hours for their own profit, which
accounted for only 3% of sown land, provided 30% of all the table food in the Soviet
Union. Party leaders struggled
to deal with the low agricultural output, poor quality of consumer goods,
technological backwardness, transport breakdowns, and widespread
corruption. Over the next twenty years,
despite numerous reform attempts, the Soviet economy continued to decline as
the percentage of resources allocated to military production escalated toward
one-third of all national income, severely reducing funds available for other
investments or for consumer needs. The
country became heavily dependant on the export of oil and gas. Rising prices for these commodities during
the 1970s helped keep the leaking economy afloat, but when prices declined in
the 1980s the economy faltered. Living standards had improved during the
1960s and 1970s, but at a terrific cost.
According to Soviet estimates, half of all rivers were severely
polluted, and over 20% of Soviet citizens lived in regions of “ecological
disaster.” Respiratory and other
diseases rose, impairing both morale and economic performance. Infant mortality rates (the number of
children who die before their first birthday—a traditional measure of health
care standards) also rose in several regions, sometimes matching the highest
levels anywhere in the world despite the country’s advanced health care
system. The Soviet Union
was a military superpower, but with an economy that in many ways resembled a
third-world country, or as one British journalist remarked: “Upper
Volta with missiles.”
Cracks also continued appearing in the satellite countries
of Eastern Europe.
In the early 1980s, strikes in the Polish seaport of Gdansk
(formerly Danzig) forced the Communist government to
negotiate with the strikers. This led to
the formation of the first independent trade union in a communist country, Solidarity. Under the leadership of Lech Walesa, Solidarity successfully forced the government to grant
a relaxation of press censorship, wage increases, shorter working hours, and
more freedom for the Catholic Church.
When it became apparent that Solidarity was capable of challenging the
Communist Party’s control of the country, General Wojciech Jaruzelski, who had become premier and
head of the Communist Party earlier in 1981, imposed martial law (strict
military rule) and arrested Walesa and other Solidarity leaders. Many believe that Jaruzelski’s
actions prevented a Soviet invasion similar to what had occurred previously in Hungary
and Czechoslovakia. Martial law, however, was unsuccessful in
eliminating Solidarity and its challenge to the power of the Communist
Party. After martial law was lifted in
1983, under heavy economic pressure from the United
States, Solidarity re-emerged as a powerful
political force.
Brezhnev referred to the Soviet system as “developed socialism.” In actuality, during the last decade of his
rule the USSR
settled into a slowly declining lethargy.
The government continued to control the economy, attempting to make
minute decisions for a country of 266 million.
Businesses operated without any fear of closure or bankruptcy and little
concern for product quality. Meeting
production targets, usually determined in Moscow,
meant everything. For example, companies
manufacturing nails had targets assigned by weight. This encouraged them to use weaker alloys
that increased the weight of the nails but caused them to shatter when hit with
a hammer. The Soviet economy managed to compare fairly
well with much of the developed world until the 1970s when there became a far
greater emphasis on new technology such as computers and microelectronics. This was an arena in which the Soviet economy
simply could not compete. The
installation of new equipment and more efficient techniques was discouraged in
the USSR
because they would invariably interrupt production, jeopardizing meeting the target. Because businesses did not pay for their
resources or labor, there was tremendous wastage of both. With an industrial output of only 75% of the United
States, Soviet industry consumed almost the
same amount of energy.
Unemployment was virtually
non-existent, but workers seldom worked very hard. Wages were low, and there was little
incentive for extra effort. It was
common for workers to leave work to shop or run errands. Firing a worker (except for political
reasons) was virtually impossible. Workers
often joked: “We pretend to work and they pretend to pay us.” Without any incentive, the concept of service
was non-existent. Waiters often smoked
and conversed in the back of restaurants while customers waited hours for their
orders to be taken and food to arrive.
As memories of communism began to recede in the 2000, a Warsaw
galleria staged an exhibition entitled “Gray in Color: 1956-1970” that attempted
to create a typical restaurant in a communist country circa 1960s:
The tables are set with thick, badly painted china,
government standard, with silverware of some cheap, scratched metal alloy. A
fan of thin, shiny and somehow unabsorbent napkins
pokes out of a thick glass; the salt shaker is a jam jar with holes punched in
the lid and rice mixed in, to stop clumping. There are other jars, with a few
dusty plastic flowers.
The menu on the wall has more than 50 choices, but
only a few dishes, like macaroni with butter or with sour cream, pirogi and a tomato, macaroni and meat soup, have prices
listed next to them, meaning that they are available.
The sour-sweet smell of onions fried in bad oil
fills the air.
Repairs to anything were seldom made. The electricity went off regularly in the
cities, and getting a plumber or household repairman was virtually
impossible. Wages were low, but so were
government-controlled prices. Prices
were often artificially low, bearing no relationship to the actual cost of an
item. As a result, people could afford
to buy items, but there were chronic shortages of virtually everything. Shopping was a nightmare, requiring customers
to stand in endless lines, often to be told that the store was “sold out”
before they even got close enough to enter.
Russian women carried shopping bags, or avos’kas, with them everywhere
they went, just in case they were to come across something of value that had
become suddenly (and no doubt temporarily) available. People waited years to obtain their own
apartments (most newlyweds had to live with the groom’s parents), purchase a
television, or buy an automobile. The products that could be purchased were
often of very poor quality. Access to
foreign-made goods was infrequent and highly coveted. Western visitors were often begged to trade
or sell their clothing (especially blue jeans), music, or other private
possessions. Rock music, banned as
“decadent” in the USSR,
was copied from records onto used X-ray film and traded privately. The plight of Soviet women was especially
perplexing. Officially, women were
granted complete equality with men after the 1917 Revolution, and women occupied
important positions in almost all of the professions long before western women
achieved similar status. Social
attitudes, however, changed very little as Russian men expected their working
wives to handle all of the domestic duties as well as their full-time
jobs. The laborious process of shopping,
housekeeping, and child raising was left almost
exclusively to women, and while Soviet women were “equal” in principle, very
few rose to the highest levels of the party.
Wage levels differed very little between occupations and
were uniformably low, so money was not extremely important. What really counted was
connections or “blat.” A friendly
butcher could set aside meat for a friend, and knowing a plumber was more
highly valued than meeting a famous celebrity.
What developed was an underground economy or “black market” where necessary goods could be obtained privately,
either through barter or by paying prices far in excess of the government’s
official prices. Workers would steal
from their place of employment and then trade the items for goods that other
workers had stolen. Theft from the
workplace was almost an accepted behavior, and the belief was that an honest
worker only ended up depriving himself and his family: “Whoever does not steal
from the state, steals from his family,” was a commonly heard expression. Corruption became such a significant problem
that virtually every economic activity in the Soviet Union
was dependent on an intricate system of bribes or blat. Of course, the most
advantageous form of blat accrued
(built up) to the party leadership.
Party leaders had access to a wide-range of special privileges including
the right to shop at special stores, luxury apartments, chauffeured limousines,
exclusive resorts, and even special schools for their children. In a “classless society,” the nomenklatura (party leaders, military
officers, the secret police, prominent scientists, and famous athletes and
entertainers) constituted a distinct privileged class.
While the loosening of censorship and political
persecution during the early Khrushchev years came to an end during the
Brezhnev era, ordinary citizens no longer lived in fear of execution or
imprisonment in slave labor camps. The
state did, however, have immense power to punish any opposition. Dissidents could be fired from their jobs and
assigned menial tasks. Housing could be
withheld or persons transferred to remote regions of the country. Travel could be denied or a dissident’s
children could be barred from higher education.
In addition to punishing dissidents, the immense state bureaucracy often
produced maddening ironies. An ill
worker, in order to be excused from work, had to report to a doctor and wait
for hours to get written permission to return home.
Ordinary Soviet citizens often responded to their fate
with humor and ingenuity. Although
public criticism of their country’s leaders was forbidden, they were often the
subjects of private jokes. In one of
these jokes, Brezhnev was praised for “his sincerity,” due to the fact that “he
looked like an idiot, spoke like an idiot, and was an idiot.” Another joke ridiculed the stalled economy:
How would different Soviet leaders react if the train they were traveling on
stalled? Answer: Lenin would persuade
the engineer to do his best to repair the engine and get the train going. Stalin would have the engineer shot and put
another in his place, shoot him if he could not do the job, and so on until he
found one that could. Brezhnev would
say: “Let’s draw the curtains and pretend we’re moving.” Alcohol provided another refuge. The average Russian adult consumed the
equivalent of eight liters of alcohol per year, the highest rate in the
world. In the late 1970s, 50,000 people
per year died of alcohol poisoning.
The frustrations of daily life were, however, moderated by
several factors. Education and health
care were free. Public transportation
was cheap and relatively efficient.
Alcohol was inexpensive and plentiful.
Workers received long vacations and could often travel to warm beaches
in the Crimea, Yugoslavia,
Romania, or
even Cuba. Retirement came early, at age 55 for women
and 60 for men. State pensions were
close enough to the meager wages earned by working that retirement seldom
required any greater financial hardship.
Soviet citizens could also take immense pride in the accomplishments of
their country. Every small city had a
huge memorial to the sacrifices of the Second World War and veterans were
treated with immense respect. Moreover,
the USSR was
feared and respected as a superpower.
The country had launched the world’s first satellite, sent the first man
into orbit (as well as the first woman), and conducted the first space walk. Soviet athletes dominated the Olympics, and
the quality of education compared favorably with any other country. Most citizens could afford to attend
world-class ballet, theatre, concerts, circuses, and athletic events at nominal
(insignificant) cost. By the 1970s, the
government had created an informal and unspoken “social contract” with its
citizens. In return for giving up the
freedom to choose their leaders or criticize their government, citizens
received a life of certainty and security.
As long as they were politically compliant, citizens had little reason
to worry about unemployment, rising prices, or being abandoned in their old
age. Although life in the USSR
was primitive by Western standards, it offered a degree of comfort and security
unimaginable to Soviet citizens prior to the 1950s.
Until 1985, the Soviet Union
plodded along under an aging, often ill, leadership. By 1980, the average age of the Politburo was
70. After many years of illness,
Brezhnev died in November 1982. Yuri Andropov, age 68, succeeded
Brezhnev. A railway administrator’s son
of Cossack descent, Andropov, had been the Soviet ambassador to Hungary
from 1954 to 1957, playing a major role in crushing the 1956 revolution. In 1967, he became chief of the KGB, the Soviet secret police, and
remained in that post for the next fifteen years. He entered the Politburo in 1973 and was
named General Secretary and President the day after Brezhnev’s death. Andropov’s position in the KGB gave him
unique access to virtually all the information available in the country, and he
was keenly aware of the rotten condition of the Soviet economy. As a result, he sought to reform the economy
without jeopardizing the position of the party, commenting: “First we’ll make
enough sausages and then we won’t have any dissidents.” He set out immediately to increase output and
fight corruption, firing party officials who did not perform up to his
standards and replacing them with younger party leaders, such as Mikhail Gorbachev,
from the provinces (outlying areas).
The police even began to stop people on the street during working hours
interrogating them as to why they were not at work. A fatal kidney ailment, however, cut short Andropov’s
rule before it could achieve any significant results. He fell ill in the summer of 1983 and
lingered, powerless, until his death in February 1984.
The last of the Stalin protégés was Konstantin Chernenko, who succeeded Andropov to the posts of General
Secretary and President. Chernenko had
ridden Brezhnev’s coattails since the 1950s, earning himself the nickname of
“Brezhnev’s valet,” but had been soundly defeated by Andropov for the top job
in 1982. Chernenko’s
selection over Andropov’s young protégé, Gorbachev, symbolized the old guard’s
reluctance to relinquish its power; however, his advanced age of 74 and poor
health signified that he would only be temporary caretaker. The strain of leadership almost immediately
broke Chernenko’s fragile health, and he soon died in
March of 1985, 13 months after succeeding Andropov. With Chernenko’s
death, the Soviet Union ended an era and the tottering
Soviet system passed into the hands of a new generation of leaders. No one could have predicted in 1985, however,
that within a decade, the entire system would collapse.
The Gorbachev Revolution
·
How did Mikhail Gorbachev differ
from his predecessors?
·
In what ways did Gorbachev pursue
his policy of openness?
·
Describe Gorbachev’s economic
reforms.
·
How did Gorbachev change the
structure of the country’s government?
Mikhail Gorbachev,
representing a new college-educated generation of Soviet leaders, moved rapidly
to take power after Chernenko’s death. At 54, he was a full generation younger than
his predecessors. Born on a kolkhoz in
1931, Gorbachev had been a college student when Khrushchev began
de-Stalinization. In 1970 he became a regional party secretary
(similar to a governor), and a year later was made a member of the Central
Committee. He was placed in charge of
Soviet agriculture in 1978 and became a member of the Politburo in 1980. Gorbachev had traveled outside of the Soviet
Union before becoming General Secretary, both as part of formal
delegations and on holiday with his wife, Raisa. Andropov recognized him as a man of ability,
brought him to Moscow, and soon
Gorbachev was seen as his closest associate.
His appointment as General Secretary was clearly a victory for those who
sought change. On the day of his selection,
Gorbachev had confided to his wife: “Life can’t be lived like this any longer.” Once in power, Gorbachev quickly began to
implement the reforms that Andropov had only hinted at, establishing a platform
based on Glasnost (openness) and Perestroika (restructuring) in an
attempt to bring new life to the Soviet Union.
Glasnost was
Gorbachev’s way to motivate the Soviet people to be more creative and work
harder, while Perestroika attempted
to modernize the Soviet economy. These
two themes launched the final phase of the de-Stalinization campaign begun by
Khrushchev at the Twentieth Party Congress in 1956. Older politburo members were replaced by men
twenty years younger, who often referred to themselves as “Children of the
Twentieth Congress.” Among these new
faces were Eduard Shevardnadze, a Georgian who became
Foreign Minister and Gorbachev’s most dependable supporter, as well as Boris
Yeltsin, whom Gorbachev appointed Moscow Party Chief in 1985. Gorbachev also tried to mobilize the support
of the intellectual community who had become either cynically disinterested in
politics or dissident critics of the regime during the Brezhnev era. Under Glasnost,
he was willing to tolerate a level of political criticism unprecedented in
Soviet society. As examples, he brought
dissident physicist Andrei Sakharov back from internal exile and permitted the
publication of the works of exiled author Aleksandr
Solzhenitsyn, who had harshly
criticized the Soviet system in books such as One Day in the Life of Ivan Denisovich and The Gulag Archipelago. For the first time, the party acknowledged
mistakes that had long been common knowledge but now could be openly discussed,
including the execution of the Tsar’s family and murder of Polish officers by
the Soviet secret police during World War II. Gorbachev also permitted unprecedented
criticism of party and political leaders by the press and television. Greater freedom of religion was also
granted. In 1988, he allowed the celebration of the
1,000th anniversary of Russia’s conversion to
Christianity, and Gorbachev became the first Soviet leader to visit
the Vatican in
December 1989. After meeting with the
pope, Gorbachev expressed: “We need spiritual values; we need a revolution of
the mind…. No one should interfere in
matters of the individual’s conscience.”
In
October 1990, an Orthodox service was held at St. Basil’s Cathedral in Moscow’s Red Square, for the first time since
1917.
Even more significantly, Gorbachev personally projected a
clear break with previous Soviet leaders.
A Time magazine account of his
visit to a state farm in 1989 demonstrated the new Gorbachev style:
Officials of the Zavorovo
state farm near Moscow had prepared
carefully for the big day last August.
They had even built a special staircase to spare their distinguished
visitor the indignity of climbing down a hill to the potato fields below the
main road. Mikhail Gorbachev would have none of it. Stepping out of his limousine, he gave the
staircase a dismissive wave and scrambled down the steep incline in his neatly
pressed gray business suit, leaving his surprised entourage to run after him in
full view of television cameras.
At the bottom of the
hill, Gorbachev asked the farmers, lined up beside their equipment like
soldiers on parade, about the mood on the farm. “Good. Businesslike,” came the
replies. Gorbachev was not satisfied. “I always hear the same answer,” he said. “[But] there are always problems.” For example, he asked, was everything
available “except for vodka,” a teasing reference to his anti-alcoholism
campaign. Well, no, one farmer
mumbled. It was the season for making
jams and jellies, and sugar was scarce.
Gorbachev shot back: Do you know why?
Moonshiners are buying up all the sugar to
make home brew. “Let’s talk straight with one another,” said the leader. “Isn’t
it time to bring the making of moonshine to an end? That sort of people belong
back in the times when the dinosaurs lived.”
Gorbachev’s reforms were initially very popular both
inside and outside of the Soviet Union. He was often compared to former U.S.
President John F. Kennedy due to his youth (especially in comparison to his
predecessors), energy, and attractive wife.
Large, adoring crowds met him when he traveled abroad. Even before he became General Secretary,
foreign leaders could recognize a new type of Soviet leader. British Prime Minister Margaret Thatcher, a
hard-line anti-communist, met with him in London
in 1984 and pronounced: “I like Mr. Gorbachev.
We can do business together.”
During the first years of his rule, Gorbachev was the undisputed master
of the party and the state, putting down rivals with great skill and using
public opinion to neutralize opponents, while building a new popular power base
outside of the part bureaucracy.
Gorbachev originally sought to use Perestroika merely to fine-tune the traditional centrally planned
economic system, but the problems of the entire system were too severe to be
improved by minor measures. An April
1986 nuclear power plant disaster at Chernobyl in the Ukraine
seemed to symbolize the crumbling status of the country. A test set off steam and hydrogen explosions
that ripped apart the graphite reactor core, blew off the roof, and released 30
to 40 times as much radioactivity as the Hiroshima
and Nagasaki atomic bombs combined. Poor workmanship, bad judgment upon the part
of the operators, and inadequate safety precautions were responsible for the
accident, and its effects were more devastating due to the initial efforts of
Soviet officials to cover-up the magnitude of the problem. Despite the disaster, party officials
insisted on holding the traditional May Day parade in Kiev,
glorifying the triumphs of the Soviet system, less than a week after the
explosion. Thirty workers died
immediately at the facility, and 135,000 people were evacuated from the
surrounding "Exclusion Zone."
By 1988 the depth and severity of the Soviet
Union’s problems drove Gorbachev to attempt to move toward a market economy, where supply and demand
rather than the government would set prices and production. He permitted the development of the first
private businesses in the USSR
since the New Economic Policy of the 1920s, mostly small kiosks that sold
clothing and other consumer goods outside of the government-controlled price
structure. Also, for the first time since the early
1920s, factory workers were allowed to elect their own directors, and factories
and mines were permitted to make their own production decisions after they
fulfilled their state quotas.
Unfortunately, Gorbachev faced challenges that demanded more
than just a change in personnel or small changes in procedure. The transition to a market economy proved to
be far more difficult than Gorbachev and his advisors imagined, as a report
from early 1989 indicated:
The overall Soviet economy remains a near
shambles. The budget deficit—caused in
part by (government subsidies to inefficient) factories and by subsidies for
food and housing—is about 11% of the GNP, by some estimates. The ruble, arbitrarily said to be worth $1.60
but not freely convertible into dollars or other Western currencies, brings as
little as 10 cents on the black market.
But price controls have repressed ... inflation, and people have more
paper money—about 300 billion rubles in savings—than there are goods available
for purchase.
Translated to a personal level, this means that
day-to-day life in the Soviet Union is as difficult as
ever. Not only are big consumer items
like refrigerators and washing machines in short supply—the average wait to buy
the cheapest Soviet car is seven years—but staples of everyday life are also scarce. Long lines snake into the street for such
ordinary items as sausage, rice, coffee and candy.
Gorbachev’s reforms are part of the problem. He is trying to force factories to become
financially profitable, so they are (marking) up products in order to price
them higher than the everyday models that are price-fixed by the
bureaucracy. Moscow
consumers were deprived for months this winter of regular soap (32 cents a bar)
because enterprises wanted to produce only a luxury soap that they could price
at $1.60 a bar.
The longer Gorbachev pursued his program, the smaller his constituency
(group of supporters) became. With the
relaxing of government price controls on some products, prices soared beyond
the means of many Soviet citizens and encouraged the hoarding of other products
in fear that their prices would be allowed to rise as well. Low Soviet wages during the Brezhnev era had
still entitled citizens to purchase the basic needs of life due to the low cost
of items controlled by the government.
Gorbachev hoped that higher prices would provide the incentive for
industries to produce more and higher quality products. Unfortunately, this did not immediately
occur. Prices rose immediately, but
wages and production did not. The
average Soviet citizen had to work ten times longer than the average American
to buy a pound of meat. Decades of poor work habits also could not
disappear overnight. Soviet factories,
accustomed to rigid central planning and the production of capital goods, could
not immediately adjust to the demands of a market economy. Shortages began to disappear, but many Soviet
citizens could not afford to purchase the products in the shops. Gorbachev also opened the Soviet economy to
more foreign investment. McDonald’s
opened a restaurant in Moscow that
immediately attracted huge crowds; however, a simple meal cost the equivalent
of several weeks’ wages for most Soviet citizens.
In order to accomplish economic reform, Gorbachev knew
that he would have to overcome the objections of those in positions of
authority who benefited from the current structure. The Communist Party posed a special problem
for Gorbachev. The party had become
corrupt and reactionary (backward thinking), concerned more with
preserving its privileges than meeting its responsibilities. Economic progress, he believed, required him
to also reduce the role of the party and alter the governmental structure. At the Party Congress in June 1988, Gorbachev
proposed a sweeping change in the Soviet government. Under his plan, which the Congress adopted,
the focus of leadership switched from the party structure (Party
Congress—Central Committee—Politburo) to the official government (Congress of
People’s Deputies—Supreme Soviet—President) and thus the party became
subordinate to the state. In March 1989,
Soviet voters took part in their first nationwide competitive election since
1917, choosing the newly reconstituted 2,250-member Congress of People’s
Deputies, which was to serve as the elected representative of the Soviet
people. Unlike the previous rubber stamp elections in
the USSR, many
powerful Communist Party officials were voted down, including 38 Party First
Secretaries. The Congress convened in May and elected
Gorbachev to a five-year presidential term.
From the ranks of the Congress came the new 400-member Supreme Soviet, which was to function as a form of working parliament. The selection of the Supreme Soviet was not a
totally democratic process because a number of positions were reserved for top
party leaders and could not be contested; yet it still marked an amazing
departure from the party’s monopoly on political power that it had enjoyed
since the civil war. Unlike the old
Supreme Soviet, which never saw a “no” vote, the Congress and the new Supreme
Soviet proved to be outspoken and controversial bodies, often criticizing
Gorbachev either for too much reform or for moving too slowly. Soviet television covered the debates from
these bodies and work stopped in factories and offices as critical statements,
which would have landed the speaker in jail just five years earlier, were now
publicly uttered by elected representatives.
In March 1990, the new Congress of People’s Deputies amended Article Six
of the Soviet Constitution, which had guaranteed the Communist Party its
monopoly as the “leading authority” in government.” In its revised form, Article Six stated that
the Communist Party, together with “other political parties and social organizations,
has the right to shape state policy.”
This opened the way for the first multi-party elections since those for
the Constituent Assembly in the fall of 1917.
Dismantling The Soviet Empire
·
In what ways did Gorbachev change
the USSR’s
policies toward the U.S.?
·
Describe how communist rule came
to an end in Poland.
·
How did events in Hungary
lead to the dismantling of the Berlin
Wall?
·
Why was Romania
an exception to the dissolution of communist rule in Eastern Europe
during the fall of 1989?
Although Gorbachev’s revolution struggled domestically, it
achieved dramatic results in the foreign policy arena. Gorbachev first met with U.S. President Ronald Reagan in Geneva
in November 1985. Reagan, who had
earlier proclaimed the Soviet Union “an evil empire,”
was skeptical that any Soviet leader would dramatically alter his country’s overall
Cold War strategy. When the two men met
privately, however, they got along very well, and Reagan returned to the U.S.
convinced that a new era between the superpowers had begun. Gorbachev realized that his economic
restructuring had little chance of succeeding unless he was able to drastically
reduce military expenditures. Reagan’s
support of a Strategic Defense
Initiative (SDI or what was dubbed “Star Wars Technology”) threatened to
destroy the doctrine of Mutually Assured
Destruction (MAD) that had preserved nuclear peace since both countries
possessed the atomic bomb. Neither side
could use its weapons without the assurance that they would be destroyed in a retaliatory
attack. Reagan’s advocacy of a space missile
defense system that was capable of shooting down an enemy’s incoming warheads
raised the possibility that the U.S.
could attack the Soviet Union without fear of retaliation. Although there was no assurance that the
technology would be effective, it raised the specter of a renewed arms race, a
risk that Gorbachev could not bear. Gorbachev
did everything possible to diffuse tension with the United
States, meeting numerous times with Reagan
and his successor George Bush. He pulled
Soviet troops out of Afghanistan
in 1989, joined in the UN resolutions condemning Iraq’s
takeover of Kuwait
in 1990, and cooperated in the U.S.
led alliance’s military defeat of Saddam Hussein’s forces in the 1991 Persian
Gulf War.
Gorbachev’s desire for better relations with Western
powers also included a dramatic change in policy toward the communist countries
of Eastern Europe.
At Chernenko’s funeral, he met with leaders of
the Warsaw Pact nations and told them that he was committed to a policy of
non-interference in their affairs. Although the leaders initially disbelieved him, as time went on his
actions within the Soviet Union led people throughout Eastern
Europe to believe that change was
possible without fear of a Soviet invasion. In most of the countries a similar pattern of
change developed. Public demands for reform,
often inspired by Gorbachev’s policies in the USSR,
forced older Stalinist rulers to give way to Communist reformers. Then the reformers were forced to legalize
non-communist parties and permit free elections. Communist leaders often assumed that, as long
as they promised continual reform, they would be able to win these contested
elections. This assumption proved to be
an enormous error. In every one of the
Soviet satellites of Eastern Europe, free elections
meant stunning defeats for the Communists.
This process began in Poland
and Hungary.
The declaration of martial law in Poland
in 1981 had done little to end the threat that the Solidarity movement posed to
the Communist Party led by General Jaruzelski. Backed by the increasingly powerful Roman
Catholic Church, which had been strengthened by the election of Poland’s
Karol Cardinal Wojtyla as Pope John Paul II in 1978,
Solidarity and its leader Lech Walesa
were able to force the government to gradually loosen its grip on power and
introduce economic reforms. A weakening
economy and a series of Solidarity-led strikes in 1988 forced the government to
make further, unprecedented concessions.
Solidarity was re-legalized, and free elections were promised. In return, Solidarity agreed to end the
strikes and support General Jaruzelski as a candidate
for president. In the June 1989 elections,
a majority of the seats in the new Polish Parliament were reserved for
Communists; however, Solidarity won almost every seat that it was allowed to contest. Although the Communists narrowly clung to
power, they were unable to form a government as several small parties in the
parliament, who had formerly been allied with the Communists, joined with the
Solidarity representatives to oppose them.
With the Communists unable to select a prime minister who could command
the support of parliament, Jaruzelski, who had
narrowly avoided defeat in the presidential election, was forced to ask
Solidarity to form a government. In
August, Tadeusz Mazowiecki,
a close aide to Walesa, formed a coalition government
in which non-Communists controlled 19 of the 23 ministries. For the first time in forty years, the
Communist Party had been forced to surrender power in an Eastern European
country. Mazowiecki
and Solidarity began to dismantle the communist system and consolidate a
complete peaceful transition to democracy.
Like the Poles, the Hungarians had always been one of the
least compliant satellites. Even the
armed Soviet invasion of 1956 failed to stem the Hungarians’ desire for freedom
from Soviet control and communist orthodoxy.
During the late 1970s, Hungary
had instituted market reforms in its economy and experienced economic growth
that gave it the highest living standards in Eastern Europe. During the 1980s, the Communist government
further encouraging the growth of the private sector of the economy, relaxed
censorship laws, allowed the formation of independent political groups, and
legalized the right to strike and demonstrate.
Although it was less obvious than in Poland,
communism in Hungary
was gradually collapsing. Confident of
its growing economy and desiring greater financial aid from the United States,
on May 2, 1989 the Hungarian government even began to dismantle its border with
non-communist Austria, allowing free passage to the West and thus knocking a
hole in the Iron Curtain.
Gorbachev, having already renounced the Brezhnev Doctrine,
did nothing to stop the disintegration of communism in Poland
and Hungary. The Hungarian decision to dismantle their
border with Austria
had little effect on Hungary,
as the country was already moving toward political liberalization, but many
East Germans saw this as an opportunity to escape their rigid, Stalinist
government. Since East Germans were
permitted to travel freely to Hungary,
thousands flooded across the Hungarian border and then moved on to Austria
and West Germany. Faced with this massive exodus
(escape), fueled by the fear that the escape route could close any day, the
East German government had to act to swiftly to stop the crisis. Gorbachev, visiting East Berlin
on Oct. 7, the 40th anniversary of the communist state, warned the East German
leaders that they could not count on Soviet support if they used force against
their own people, and advised them to launch their own perestroika: “Life itself punishes those who delay.” The hard-line Communist rulers, who had
always depended on the Soviet Union for support, were
crushed. The leader of the party,
74-year-old Erich Honecker, resigned. His replacement, a far younger and more
moderate member of the party, soon promised East Germans that they would have
the right to travel freely to the West.
Within a week, cheering crowds of East and West Berliners dismantled the
Berlin Wall without opposition. The
collapse of communism in East Germany
occurred so swiftly that it defied the imagination:
For 28 years it had stood as the symbol of the
division of Europe and the world, of Communist suppression, of the xenophobia
of a regime that had to lock its people in lest they be tempted by another,
freer life—the Berlin Wall, that hideous, 28-mile-long scar through the heart
of a once proud European capital, not to mention the soul of a people. And then—poof!—it was gone....
What happened in Berlin
last week was a combination of the fall of the Bastille and a New Year’s Eve
blowout, of revolution and celebration.
At the stroke of midnight on Nov. 9, a date that not only Germans would
remember, thousands who had gathered on both sides of the Wall let out a roar
and started going through it, as well as up and over. West Berliners pulled East Berliners to the
top of the barrier along which in years past many an East German had been shot
while trying to escape; at times the Wall almost disappeared beneath waves of
humanity. They tooted trumpets and
danced on the top. They brought out hammers and chisels and whacked away at the
hated symbol of imprisonment, knocking loose chunks of concrete and waving them
triumphantly before television cameras.
They spilled out into the streets of West Berlin
for a champagne-spraying, horn-honking bash that continued well past dawn, into
the following day and then another dawn. As the daily BZ would headline: BERLIN
IS BERLIN AGAIN....
When the great breach finally came, it started undramatically. At a
press conference last Thursday, (East German leaders) announced almost
offhandedly that starting at midnight,
East Germans would be free to leave at any point along the country’s borders,
including the crossing points through the Wall in Berlin,
without special permission, for a few hours, a day or forever. Word spread rapidly through both parts of the
divided city, to the 2 million people in the West and the 1.3 million in the
East. At Checkpoint Charlie, in West
Berlin’s American sector, a crowd gathered well before midnight. Many had piled out of nearby bars,
carrying bottles of champagne and beer to celebrate. As the hour drew near, they taunted East
German border guards with cries of “Tor Auf!” (Open
the gate!).
On the stroke of midnight,
East Berliners began coming through, some waving their blue ID cards in the
air. West Berliners embraced them,
offered them champagne and even handed them deutsche mark notes to finance a
celebration (the East German mark, a nonconvertible currency, is almost worthless
outside the country). “I just can’t
believe it!” exclaimed Angelika Wache,
34, the first visitor to cross at Checkpoint Charlie. “I don’t feel like I’m in prison anymore!”
shouted one young man.
After this, the government of East
Germany totally collapsed and plans were
made to reunify the two Germanys,
a thought that would have been viewed as impossible just months before.
The sudden collapse of the hard-line Communist regime in East
Germany led to mass demonstrations in other
Eastern European countries. As in East
Germany, the befuddled communist governments
had no clue how to respond without the heavy hand of Soviet support. The underground democracy movement in Czechoslovakia
was swept to power simply as a result of an outpouring of public protest
against the government. A playwright, Vaclav Havel,
who had been jailed for anti-government activities, became the new president of
Czechoslovakia,
and Alexander Dubcek, the leader of the “Prague
Spring” of 1968, became the speaker of the new national assembly. Soon, the Communist government of Bulgaria
was forced to surrender power as well.
Only in Romania
was there outright violence, as an exceptionally authoritarian communist
leader, Nicolae Ceausescu, was swept out by force and
murdered along with his wife. As in Bulgaria,
the Romanian Communist Party retained considerable power under new leadership,
and reforms moved less rapidly than in places such as Hungary
and Czechoslovakia. By January
1, 1990, Communist Party rule had ended in every former Soviet
satellite in Eastern Europe with the exception of tiny Albania,
and in July 1990 the Warsaw Pact was formally dissolved. The Soviet Union’s
empire in Eastern Europe was now gone. Gorbachev was awarded the Nobel Peace Prize
in 1990 simply for refusing to use force to prevent these changes.
The outbreak of freedom in the former Soviet Eastern
European satellites and the liberalizations in the Soviet Union
could not escape notice in the other major communist power, China. Chinese students started a protest in the
spring of 1989 in the capital of Beijing. Support for the students grew among residents
and workers, and 300,000 people took to Tiananmen Square on May 16 during a visit by
Gorbachev. Although Gorbachev did not
encourage the Chinese to demand a relaxation of party control, the symbolism of
his visit could not be ignored, and more protestors packed the square as
factory workers joined in the mass demonstrations. Martial law was declared on May 20, but tanks
were initially stopped from entering the city by human barricades. The tanks
eventually rolled through Beijing
on June 3, and soldiers fired on the crowds.
Hundreds, and perhaps more, were killed in the fighting that spread
throughout the city, including many young workers who protested the arrival of
tanks and a few soldiers set afire by incendiary devices thrown by
demonstrators. Charges of counterrevolutionary
propaganda were brought against hundreds of students and workers, and many were
jailed with their fate unknown.
The End of the Soviet Union
·
Explain Gorbachev’s loss of
popularity within the Soviet Union. How did Glasnost
eventually spiral out of his control?
·
Why did nationalism soon become a
threat to the USSR?
·
What factors made Boris Yeltsin a
rival to Gorbachev?
·
What factors led to the August
1991 coup? Why did the coup fail? What were the
immediate and long-term effects of the coup?
·
How did the Soviet
Union finally collapse in the fall of 1991?
By 1990, Gorbachev was far more popular outside of the Soviet
Union than within. To
foreign observers, he was an enlightened ruler who was finally permitting
democracy within the USSR
and the freeing of Eastern Europe. Within the Soviet Union,
however, his economic reforms were clearly not working and the political
liberalization only served to pave the way for more criticism of his policies
and eventually create a threat to the stability of the Soviet Union. In almost every case, his reforms produced
enormously unpredictable results. One
historian has compared Gorbachev to a trainee chemist running amok in a
laboratory, dealing with ingredients, which once tampered with, became volatile
and unpredictable. This was illustrated in the May Day parade of
1990. After the traditional celebration
of communism, complete with banners proclaiming joy and success, the march took
an unexpected turn. As the horrified
leaders of the party stood on the reviewing stand, marchers appeared bearing
banners that had never been seen in public before: “Down with the
Politburo! Resign!” “Marxist-Leninism is on the Rubbish Heap of
History.” “Ceausescus
of the Politburo: Out of Your Armchairs and onto the Prison Floors!” After showing no emotion for twenty-five
minutes, Gorbachev simply turned and led the officials off the stand. Ultimately, the Soviet state could not withstand
the fresh air of freedom. Even the
Communist Party’s youth newspaper pointed out unpleasant truths: “If we compare
the quality of life in the developed countries with our own, we have to admit
that from the viewpoint of civilized, developed society, the overwhelming
majority of the population of our country lives below the poverty line.” Citizens devoured literature that that had
previously been banned. As one Soviet philosopher observed: “People read Nineteen Eighty-four for the first time
and they discovered that Orwell… understood the soul, or soulessness, of our
society better that anyone else.” The unpleasant disclosures of Glasnost served to discredit the
legitimacy of the entire communist state and millions gave up their party
memberships in disillusionment.
Despite the changes in government, resistance from the
party apparatchiks blocked Gorbachev’s
plans for reform and forced him to make continual adjustments in order to hold
power. As economic and social conditions
deteriorated, he chose to make increased concessions to party and bureaucratic
hard-liners who were resistant to any change.
In October 1990, he abandoned a bold plan to bring a market economy to
the Soviet Union within 500 days, dashing the hopes of
his most aggressive reformers by restoring some price controls. He also said that, while he accepted the free
market, he opposed the private ownership of land and the right to sell it. In addition to his enemies in the party,
Gorbachev now faced critics who claimed his reform efforts did not go far
enough. For the next ten months his
former liberal advisers and supporters either resigned or were dismissed from
their positions as the hard-liners strengthened their positions. Rather than side with his natural allies,
Gorbachev clung to the belief that the party could be the vehicle of
change. As a result, reformers began to
abandon Gorbachev. In December of 1990
Foreign Minister Shevardnadze, one of Gorbachev’s most reform-minded advisors, resigned
from the government in an emotional speech before the Congress of People’s
Deputies, warning that the country was headed for dictatorship.
The most serious of Glasnost’s
unexpected results was a revival of separatist movements in the various Soviet
republics. The loosening of censorship
soon gave rise to nationalist movements within the fourteen non-Russian
republics. These republics, long under
Russian domination, wanted to assert their own cultures, which had been
suppressed since they had been included in the USSR. Nationalist feelings were strongest in the
three Baltic Republics (Estonia,
Latvia, and Lithuania)
which had been independent countries between the world wars but fell under
Soviet control after World War II. As a
Gorbachev aide later commented: “The union … stayed together through force or
the threat of force. But when the
republics saw what had happened in Eastern Europe, when
they saw that Gorbachev would not venture to use force on any scale, the
disintegration process grew quicker.” In the Baltic
Republics, one million people
joined hands in a huge human chain spanning Estonia,
Latvia, and Lithuania
in August 1989 to protest the fiftieth anniversary of the Nazi-Soviet Pact of
1939 that had spelled the end of their independence. Finally, in March 1990, Lithuania
declared itself a sovereign (totally independent) state, openly defying Moscow. In January 1991 the KGB and Soviet Army tried
to overthrow the anti-communist local leaders.
A confrontation ensued between the military forces and thousands of
demonstrators. Fourteen people died and
hundreds were wounded from either gunshots, beatings, or by being crushed by
the treads of tanks before the military abandoned its efforts and
withdrew. Gorbachev, who had known nothing
about the attack before it began, was furious.
In addition to the rising tide
of nationalism, economic problems grew more severe as well. Agriculture faced an estimated grain
shortfall of 77 million metric tons in the 1991 harvest, assuming the entire
crop could even be brought in from the field, an increasingly unlikely
possibility as the Soviet transportation began to disintegrate as well. Overall, agricultural output fell 17% and
industrial production by 18% in 1991.
Prices in state shops doubled in the course of the year, and meat and
sugar were once again being rationed in many parts of the country. In addition, the country suffered from the
declining price of oil, Russia’s
most valuable export. Oil revenues fell
from $22 billion in 1986 to $7 billion in 1991.
Authors Daniel Yergin and Thane Gustafson
compared the Soviet economy to an old steam engine:
In its day it had been a wonder of the world—admired
by some, criticized by others—and a model for designers elsewhere for more than
three decades. Its engineers tinkered
endlessly with the pump, trying to improve its lumbering speed and make it more
efficient. Yet at the end of their
efforts, they had to face the truth: The basic design of the engine was
stretched to its limits.
The old engine as dependable enough,
and its operators were used to its quirks.
But it used too much fuel, and it polluted badly. It could probably have been patched up for
another generation. But a new management
tried to raise its boiler pressure and get the engine going faster. Instead, it blew up.
Everything seemed to be breaking down or dismally
inadequate. Over a third of the
country’s hospital beds were in buildings with no hot water. Half of the schools lacked central heating,
running water, or indoor toilets.
Consumption of meat had dropped 30% since 1970. Perestroika
had failed and Glasnost ensured that
everyone was aware of it.
As Gorbachev’s support plummeted due to the failure of his
economic reforms (in one poll he received an approval rating of 7%), Boris Yeltsin, who had been elected
President of the Russian Republic
in the spring, became an increasingly powerful figure. Yeltsin began his career as a Soviet
engineer, entered politics, and had risen to the level of Regional Party
Secretary in Sverdlovsk (the country’s fourth largest
region) before Gorbachev made him Moscow Party Chief in 1985. In this position, he became immensely popular
for publicly dismissing bureaucrats and mixing with the people riding the Moscow
Metro (subway) to work. Unlike any other
party leader, Yeltsin was unafraid to answer direct questions from the
public. Continuing a practice he had
pioneered in Sverdlovsk,
he held open meetings in Moscow and
answered all questions submitted to him.
In 1987, he granted a lengthy interview with American reporter Diane
Sawyer and allowed the news crew to follow him throughout the day. When Sawyer asked him: “Don’t Russians—alone,
in the privacy of their homes—think that, in the end, capitalism does work?” “Well,” Yeltsin paused, “they probably do.” “Do you, she enquired?” “Of course, I do,” he replied. While Yeltsin started out as a supporter of
Gorbachev and a leading advocate of democratization and decentralization, he
soon became a critic, charging that the pace of economic reform was far too
slow.
Yeltsin first came to the attention of the world when he
was dismissed as head of the Moscow Party in 1987 for criticizing Gorbachev’s
association with hard-line conservative leaders opposed to further reform. In a dramatic comeback, he garnered an
overwhelming 92% of the popular vote in the elections for the Congress of
People’s Deputies held in February 1989.
Yeltsin visited the United States
in the fall of 1989 and was stunned by the contrast. After viewing the wide array of products in
an impromptu visit to a Houston
grocery story, he muttered, “What have they done to our poor people?” In May 1990, Yeltsin was elected the chairman
of the Russian Republic’s
legislature, and in June 1991 he was elected the President of the Russian
Republic by a huge majority of the
popular vote, becoming Russia’s
first democratically elected leader in history. Upon taking office, Yeltsin spoke of his
goals for a reborn Russia:
“Great Russia
is rising from her knees. We will,
without fail, transform her into a prosperous, democratic, peaceful,
law-abiding, and sovereign state.” With almost every act, Yeltsin repudiated the
legitimacy of the Communist Party, and his emphasis on Russian sovereignty was
a direct threat to the USSR
itself. Unrivaled in popularity, Yeltsin
clearly represented a third force to be contended with both by Gorbachev and
his hard-line critics. Yeltsin became
increasingly critical of Gorbachev, especially as he began to back away from
continual reform. When the 500-Day plan
for radical market reforms was cancelled, Yeltsin referred to the action as,
“yet another effort to retain the system that people had come to hate,” and
publicly called upon Gorbachev to resign.
Gorbachev initially failed to realize the seriousness of
the growth of nationalism within the USSR. The child of Russian and Ukrainian parents,
national identity had played no role in his life. Gorbachev tended to see himself as a Soviet
citizen and often used the terms Russia
and Soviet Union synonymously. When he visited the Ukraine
for the first time as General Secretary in 1986, he innocently referred to
“Russian achievements,” outraging Ukrainian nationalists. Finally realizing that the existence of the Union
itself was in jeopardy, in 1991 Gorbachev negotiated a Union Treaty that promised considerable autonomy (self-rule)
to the various republics. To be signed
on August 20, it sharply reduced the authority of both the central government
and the party. For many hard-liners, the
treaty symbolized the total breakup of Soviet authority. In the face of this impending agreement, an
eight-man State Emergency Committee made up of leaders of the KGB, the
military, the interior department, and other offices of the central government
launched an attempt to take power in a coup
de etat on August 19, 1991 while Gorbachev was on vacation in the Crimea. As Gorbachev was placed under house arrest at
his dacha, Vice President Gennadi Yanaev
announced that the president was ill and that a state of emergency was to be
imposed for six months. To the party’s
hardliners, Gorbachev’s reforms had gone far enough. As one of the coup supporters said of
Gorbachev and his supporters: “[they were] auctioning off our tanks, destroying
our monuments, destroying our ability to fight for freedom in the Baltics. But they
will not win. They cannot wipe out our
great history.”
The coup was
hastily planned and the plotters made an immense error in not arresting Yeltsin
who immediately rushed to the Russian parliament building in Moscow
(known as the White House). With a huge
crowd gathering outside, Yeltsin stood atop one of the tanks that had surrounded
the building and denounced the coup,
calling for a nationwide strike, and ordering all army and KGB units not to
obey the plotter’s orders. The next day,
50,000 people turned out in Moscow
to form a human chain around the parliament building, facing down the tanks
sent by the coup plotters. Large anti-coup groups mobilized in other cities and demonstrators poured into
the streets. The plotters had underestimated
the new spirit of the Soviet people. As one of the demonstrators at the White House told an American journalist:
“These monsters! They have always
thought they could do anything to us!
They have thrown out Gorbachev and now they are threatening a government
I helped elect. I will ignore the
curfew. I’ll let a tank roll over me if
I have to. I’ll die right here if I have
to.” Even young editors at the party newspaper, Izvestia, defied
orders and printed Yeltsin’s appeal to resist the coup. Finally, in Moscow,
several units of KGB and army forces refused to obey the coup leaders’ orders, and the coup
quickly began to unravel. Within days
the crisis was over, and Yeltsin emerged as the man of the hour for bravely
defying the plotters’ tanks on the streets of Moscow.
After his brave defiance of
the coup, it was Yeltsin, not
Gorbachev, who was viewed as the leader of change and opposition to the
party. When Gorbachev finally returned
to Moscow, he immediately attempted
to resume his control of the government.
He soon found, however, that the failed coup had done little to enhance his support, especially after he
reiterated his belief that the Communist Party was still the proper vehicle to
carry out reform. Even as the coup leaders languished under arrest or
committed suicide, Gorbachev continued to defend the party. Shevardnadze even blamed his former colleague
for the coup, noting that Gorbachev had repeatedly tried to appease the
hardliners and appointed six out of the eight main plotters to their government
positions. Finally, six days after the
attempted coup, the reality of the
situation became clear and Gorbachev resigned as the leader of the Soviet
Communist Party. A leading Russian
writer pointed out the contrast between Yeltsin and Gorbachev:
Yeltsin surrounds himself with democratic forces and
people tired of communism. Gorbachev
promotes the scoundrels to the highest posts in the land…. Gorbachev falls
victim to his own intrigue, casts the country into danger and nearly perishes
himself. Yeltsin, in unequal battle with
no weapons, wins the day, and saves the life of Gorbachev and his family.
Only later would Gorbachev realize the error of his
allegiance to the Communist Party. “I
should have forged a common front with the Democrats. I missed that opportunity and paid dearly for
it.”
The August coup ultimately
proved to be the Chernobyl of the
Soviet system. Designed to depose
Gorbachev and stifle reform, it accomplished only one of these goals. As the desire for reform and hatred of the
Communist Party intensified, Gorbachev was shoved aside in favor of leaders
such as Yeltsin who advocated the total destruction of the party, independence
for the republics, and more free market economic reforms. Acting under the authority of his position as
the President of Russia, Yeltsin seized control of party and KGB offices within
the Russian Republic
and then banned the party altogether in November. The leaders of other republics soon followed
suit, recognizing that the traditional power structures were now powerless to
resist this silent coup. Across the Soviet Union—after
74 years of almost total power—the Communist Party was suddenly totally
discredited and cut off from all roles in running the country. With the USSR
on the verge of collapse, the Congress of People’s Deputies agreed on September 6, 1991 to recognize the
full independence of Estonia,
Latvia, and Lithuania. On December 1 the Republic of the Ukraine,
the second most populous Soviet Republic,
voted overwhelmingly (90%) for independence.
A week later 11 of the remaining 12 republics, led by Yeltsin’s Russian
Republic, agreed to form the
loosely defined Commonwealth of Independent States (C.I.S.), essentially
dissolving the USSR. Gorbachev resigned his position as President
of the Soviet Union on December 25, 1991, and the next day the Congress of
People’s Deputies acknowledged that the USSR
ceased to exist.
Dismantling the Soviet System
·
Describe the effects of the
introduction of a market economy in Russia.
·
By what means were state-owned
businesses sold to private investors?
What were the results of this privatization?
·
What factors let to the shelling of
the Russian White House in October 1993?
What was the result of this conflict?
Boris Yeltsin was the first significant political figure
in the Soviet Union to realize that communism was
doomed. While Gorbachev maintained that
reform was possible within the party, Yeltsin realized that this was hopeless
and publicly resigned his party membership in July 1990. Events proved Yeltsin right and Gorbachev
wrong. More than anyone else, it was
Yeltsin who struck the final dagger into the USSR. When he announced an agreement between the
leaders of Russia,
the Ukraine,
and Belarus to
leave the USSR,
the Soviet Union disintegrated.
Even before the end of the USSR,
Yeltsin had taken steps to transform Russia
into a market-based economy by lifting some price controls and announcing plans
to sell off state-owned businesses.
Beginning in January 1992, Russia
began a program known as “shock therapy,” designed to quickly create a
market economy. Yeltsin was guided in
this process by a group of young, western-oriented aides headed by Yegor Guidar. Price controls were lifted on 90% of all
products, government subsidies (financial support) to businesses were
cut, plans were made to sell state-run companies to private owners, and many of
the inefficient state-run factories were forced to close or drastically reduce
their workforce. The positive effects of
this decision were almost immediate and resembled the dramatic change that
accompanied the New Economic Policy in the 1920s. Shortages were vastly reduced, and stores
filled up with goods. Imports of all
kinds—toilet paper, liquor, candy, and videocassettes—became available. Yeltsin’s advisors were also well aware that
a period of pain would ensue from this shock therapy; however, they were not
prepared for its magnitude. The greatest
problem in freeing prices was that most of the economy operated as a state
monopoly. Without the prior
privatization of businesses, there was no competition in many areas to exert
downward pressure on prices. As a result,
prices skyrocketed and the value of the ruble (the Russian currency)
plummeted. In one year, consumer prices
increased 900%, industrial production fell 12%, and the purchasing power of
Russian workers dropped 40%. Suddenly
Yeltsin, whose personal popularity had always been his main strength, was under
attack by those who could not understand the astronomic price increases. Yeltsin himself did not fully understand the
concept of a free market. After hearing
complaints from women about the price of butter in a grocery story, the
President ordered that the store manager be fired. Although they had previously endorsed shock
therapy by a vote of 876-16, members of the Russian legislature, the Congress
of People’s Deputies, (who had all been elected under communism) revolted and
refused to end subsidies to industries and dramatically raised taxes. Fearful that the turmoil of the economic
changes would destroy his power, Yeltsin sacrificed Guidar
to the parliament. Knowing that they
would not select Guidar, Yeltsin allowed the
parliament to choose a new prime minister.
They selected Victor Chernomyrdin, an uninspiring former Communist bureaucrat
who had risen to become the head of Gazprom, the
Soviet energy monopoly, which controlled a third of the world’s natural gas.
Yelitsin’s team of young
economic advisors, led by Anatoly
Chubais, sought to build support for the government by privatizing or selling off state-owned businesses to private
investors as swiftly as possible. In
order to win approval for privatization from the communist-dominated
legislature, however, Chubais had to agree to a scheme virtually guaranteeing
that most of the newly privatized businesses would fall into the hands of their
communist-era managers. In theory, all
citizens were given vouchers that could be used to purchase stock in newly
privatized businesses, but managers and employees of the businesses to be
privatized were given the right to purchase 51% of the shares in their
businesses at deeply discounted prices. Numerous dirty tricks were employed by managers
to cheat the employees out of their shares.
In one famous case, at the Novosibirsk Tin Factory, the factory director
used an ingenious combination of bribes and coercion to acquire the shares of
his work force. Expensive consumer goods
such as televisions were purchased with company funds and then traded to
employees in return for their shares.
Wages were also withheld or cut, giving workers little choice but to
sell their shares inexpensively to the director. Because of tactics such as these, two-thirds
of the medium and large-sized companies privatized between 1992 and 1994 ended
up back in the hands of their old managers. An observer called privatization “the largest
political bribe in history,” with the communist nomenklatura turning over political power in return for being allowed to retain
effective ownership of the state’s assets that they had previously managed. The ability of the nomenklatura to retain its power
is not really that surprising. Due to
the blatant corruption of the Brezhnev Era, the party attracted the most ambitious
and advancement-motivated individuals in Soviet society. These “Party Men” were the quickest to adapt
to the new system. “The party big shots and the KGB people were, of course, the
quickest to adjust” said writer Vladimir Voinovich. “They betrayed their so-called ideals in a
flash.” As author David Remnick
noted: “The old nomenklatura
did not so much give up power as scurry around trying to find their place and
privileges on the new map of influence.”
Many new managers simply used their position to become
instant millionaires by borrowing money from the government at interest rates
of 20-30%, converting it into dollars and then paying their loans back with
inflation-depreciated rubles. Another
tactic was to sell products abroad at deeply discounted prices, running the
companies into bankruptcy while guaranteeing a quick windfall of cash for the
owners. Many of these instant millionaires
then deposited their gains in Swiss banks, depriving the country of much needed
investment capital. Even with
privatization, industries still received substantial state subsidies to avoid
massive bankruptcies. Because of the
Stalinist pattern of industrialization, cities, and even entire regions, were
dependent upon single industries where the enterprises owned and operated the
schools, housing, and health care for the workers. Without resources of its own, the government
could not afford the social costs of allowing these industries to fold. As a result, as many as 50%
of Russian businesses operated at a loss throughout the 1990s but were
protected from bankruptcy by government subsidies.
In addition to former Party officials, a new class of
young “New Russians” also began to
emerge, often exploiting connections in the government to gain an advantage in
the privatization process. Government
officials had immense power to determine success or failure in business and
this led to incredible corruption. “To
become a millionaire in our country it is not at all necessary to have a good
head and specialized knowledge,” said Pyotr Aven, former minister of trade and later a bank
president. “Often it is enough to have
active support in the government, the parliament, local power structures and
law enforcement agencies.” Bribery became an essential element of
business success. A leading Moscow
banker noted that government officials who issue licenses and permits
“practically have a price list hanging on the office wall.” Grigory Yavlinsky, a reform-minded leader of the western-oriented,
pro-market Yabloko party, once recalled giving
Yeltsin an urgent warning about bureaucratic thievery, only to be greeted with
a sigh and a shrug. “Grigory Alekseyevich,”
Yeltsin is said to have replied, “What do you expect? Russia
has always been corrupt.” Yeltsin blamed the corruption on the low pay
of Russian bureaucrats responsible for overseeing multimillion-dollar
industries, and on the ingrained habit developed during Soviet times of “paying
under the table” for otherwise unobtainable services.
As economic conditions grew worse, Yeltsin’s relations
with the legislature deteriorated to the point that he began to rule more and
more by decree (executive order without legislative approval) in early
1993. The legislature, led by its
chairman, Ruslan Khasbulatov, fought back, declared
Yeltsin’s decrees illegal, and narrowly failed to impeach him in March. At this point, however, Yeltsin still
retained the support of the Russian people.
Despite communist domination of the legislature, the attempt at impeachment
failed, and in April a referendum produced a 59% statement of support for
Yeltsin. With a now totally hostile
legislature, Yeltsin increasingly ignored the Congress of People’s Deputies,
issuing over 1,100 presidential orders during the first seven months of 1993.
The standoff between the
legislature and Yeltsin reached a crisis point in September 1993. When Yeltsin dissolved the legislature and
ordered new elections. Khasbulatov and
Vice President Aleksandr Rutskoi,
along with a hundred other hard-line members of the legislature, refused to
leave the Russian capitol building, the White House. Yeltsin retaliated by shutting off all gas,
water, and electricity to the building.
On October 3, supporters of the legislature attempted a coup.
Television cameras recorded Khasbulatov urging a crowd of supporters to
“seize tanks and take the Kremlin by storm” as he stood before supporters
waving the red flags of the former Soviet Union. The crowd soon seized the main television
center in Moscow, battling police
in a fight that resulted in 62 deaths.
Suddenly, Yeltsin’s government threatened to collapse under a coup that was eerily similar to
1917. As an American reporter noted:
Through most of the afternoon [of October 3] it
seemed as though a Bolshevik-style revolution was unfolding. It appeared, that is, that a mere 5,000 to
10,000 people—determined, ruthless, and facing only apathetic opposition—could
grab control of a nuclear-armed giant with 150 million people.
Deputy Prime Minister Guidar
appealed to Muscovites to come out into the streets and defend Yeltsin’s
government, stating on television that the Communists were trying to “restore
the old totalitarian regime and take our freedom away from us again.” Other famous Russians appeared on television
to urge their fellow Muscovites to oppose the coup. After a long emotional
appeal, actress Liya Akhedzhakova
lowered her voice to a whisper: “My friends!
Please don’t sleep. Please don’t
sleep tonight. Wake up! Decided this night is the fate of our poor Russia,
our hapless Motherland. Our Russia
is in danger. A horrible fate is in
store. Communists are coming.” The appeals worked. As in 1991, the crowds appeared in opposition
to what was perceived a step backward toward dictatorship. Ten thousand supporters of Yeltsin appeared
outside the Kremlin, and military units loyal to the president moved through
the streets of Moscow. The next day, tanks began to shell the White
House. The legislative leaders
eventually surrendered, but not before the building was destroyed. A total of 552 people died in the
fighting. A poll taken during the
shelling showed that 72% of the citizens of the city supported the president,
while only 9% supported the plotters.
Years of Struggle
·
Describe the structure of the
Russian government as established by the 1993 constitution.
·
What was the origin of the
conflict in Chechnya? What was the result of the 1994-96 war?
·
Describe the “Loans for Shares”
scheme.
·
Explain the factors that led to
the growth of organized crime in Russia.
With the legislature discredited and its former leaders
under arrest, the Russian people approved the country’s current constitution in
December 1993. A 450-member lower house, the State Duma is elected every four years.
Half of the Duma seats are elected from single-member constituencies
similar to the election of members of the U.S. House of Representatives. The other half is selected through a party
list system whereby voters vote for a party and then the seats are apportioned
by the percentage of the party vote.
Parties must receive at least 5% of the total vote (about three million
votes) to receive any party list seats.
The Duma has the authority to pass laws, approve the prime minister, and
impeach the president. The 178-member
upper house, known as the Federation Council, was appointed by the local
governments of each of Russia’s
region and possessed the power to review laws passed by the Duma, appoint
judges, and assent to any presidential proclamation of martial law. Under this new constitution, the president
retained enormous powers. The president
is the commander of the military, nominates the prime minister, and retains the
right to issue emergency decrees. The
president’s choice of prime minister, who manages the day-to-day affairs of the
government, can only be denied with three consecutive no confidence votes by
the Duma. Should this occur, the
president may immediately call for new Duma elections.
Concurrent with the approval
of the new constitution, the first Duma was elected to serve a temporary
two-year term. Despite the October coup, Yeltsin refused to ban the participation
of the Communist Party in the elections:
[We cannot] prevent parties from nominating
candidates and campaigning for them only because they are against the
reforms. If we take this route, we will
be virtually indistinguishable from the Bolsheviks, who first banned and then
repressed oppositional political movements because of their non-acceptance of
Soviet power.
The results of the election were disappointing for
Yeltsin. Vladimir Zhirinovsky, a
radical Russian nationalist, led his Liberal Democratic Party to victory by blaming
Russia’s
post-communist pain on “outsiders,” such as non-Russians, Jews, and western
capitalists. Pledging to restore Russian
greatness, Zhirinovsky’s supporters won the largest block in the Duma with 23%
of the vote. Although Yeltsin did not
actively campaign for a particular party, his closest supporters, Russia’s
Choice, finished second at 16%, and the Communists were third at 12%. Because of the combination of single-member
districts and party list seats, Russia’s
Choice still emerged as the largest party in the Duma with 78 seats. With the support of numerous smaller parties,
reformers friendly to Yeltsin barely constituted the largest group in the new
Duma, controlling 93 seats. There was,
however, a strong opposition block led by the Communists and their supporters,
the Agrarian Party, that controlled 81 seats.
Together with Zhirinovsky’s supporters, who won 64 seats, the so-called “Red-Brown Opposition” held a sizable
portion of the Duma and far outnumbered the members that could be counted on to
consistently support Yeltsin.
In February 1994, the Duma granted a blanket amnesty to
all persons imprisoned for participating in either the 1991 or 1993 coups.
Yeltsin’s power was further weakened, as he appeared to be drunk during
an August public appearance in Berlin,
seizing the baton from a band director and attempting to conduct the band
playing in his honor. In addition, he
suffered two mild heart attacks during the year. The economy also fell ill. In the fall, the ruble plunged in its
exchange rate to the dollar, dropping 25% in September and plunging further in
October, with a single day drop of 22%.
During 1994, the ruble dropped over 50% in value, raising the price of
almost all imported consumer goods.
Compounding Yeltsin’s problems was a war in the province
of Chechnya
in southern Russia. The origin of the crisis
began in August 1991 when General Dzhokhar Dudayev, a career Soviet military officer, returned to Chechnya
and opportunistically wrapped himself in Islamic nationalism in order to gain
power. Once in power, Dudayev
enthusiastically cooperated with the Chechen mafia to create what one Yeltsin
aide called “a free economic criminal zone.” Chechnya’s
capital of Grozny
then became a center for drug trafficking, counterfeiting, and other illegal
activities as Dudayev’s government declared its
independence from Moscow. Aware that ethnic separatism had spelled the
end of the USSR,
in December 1994 Yeltsin sent 40,000 troops to crush the rebellion out of fear
that it would be imitated by other areas of the country that were also
predominately non-Russian. The war
quickly became a disaster as the rebels put up a spirited fight. In 16 months of fighting, over 80,000
civilians died along with 9,000 Russian soldiers. The largest city in Chechnya,
Grozny,
was virtually destroyed as its prewar population of 400,000 was reduced to
100,000. Under the terms of a 1996
cease-fire, Chechnya
remained defiant of Russian authority while the Russian government refused to
approve any form of self-rule. For three
years thereafter, Chechnya
existed totally beyond the reach of Russian law. Westerners were often kidnapped and held for
huge ransom amounts. Failure to meet
these demands resulted in the beheadings of several captives in 1998.
With Yeltsin’s government clearly in crisis, in 1995 a
critical decision was made to shore up support by entering into a controversial
“Loans for Shares” program with Russia’s
leading business owners. By 1995, 70% of
Russian industry had been privatized, but many key industries, especially those
that controlled Russia’s
valuable natural resources, were still in the hands of the government. Fearful of a communist revival, Yeltsin’s top
economic advisor, Anatoly Chubais, sought to privatize as much of the remaining
state-owned businesses as quickly as possible.
Unlike the previous privatization process, there would not even be the semblance
(appearance) of open competition for ownership.
The actual plan for the Loans for Shares scheme was conceived by a group
of Moscow bankers. Knowing that the government was desperate for
money and unwilling to further encourage inflation by printing more rubles, the
bankers proposed that they loan the government 9.1 trillion rubles (equal to
$1.8 billion). In return, the government
would give them control of the key remaining state-owned businesses as collateral
(something of value pledged to guarantee the payment of a loan), although it
was clearly understood that these loans would never be repaid. The bankers or, as they were soon to be
called, oligarchs decided beforehand
who would receive what prize. As one later admitted: “We reached an agreement of who would take
what. We agreed not to get in
each others’ way.” As a result, many of Russia’s
choicest assets were given away at bargain basement prices in what was
essentially a non-competitive bidding process.
The result of these special deals was to enrich both the businessmen and
top government officials, soon earning Russia
the title of “the most corrupt major economy in the world.” Thus, these oligarchs now sat atop a virtual
empire of wealth in a country that was becoming poorer and poorer every
day. The oligarchs courted political
allies, supplied them with luxuries and campaign contributions, and also often
controlled media outlets and extensive private security forces to protect
themselves against political or physical attack. Yeltsin and his advisors were either
indifferent or acquiescent in this corruption.
Chubais, who had supervised the “Loans for Shares” program for the
government, later told an interviewer: “They are stealing absolutely everything
and it is impossible to stop them. But
let them steal and take their property.
They will become owners and decent administrators of this property.”
Despite Chubais’s optimism, the
early years of capitalism in Russia
created a lawless, “Wild West” atmosphere.
Business disputes were often settled by force, as there was no means by
which to settle disputes in court. This
led to the widespread presence of organized crime. Russia’s
murder rate doubled that of the United States
and rose to over twelve times that of Western Europe. According to a government report, there were
over 8,000 criminal gangs operating within Russia
in 1995. No small business could operate in Russia
without paying protection money to these gangs.
One advantage of paying protection money was that the gangs also offered
protection against the government’s high tax rates. With total tax levels between 55-80% of net
income, few businesses could afford to pay their taxes. Because the top gangs extended into the offices
that reviewed tax collection, paying protection to the gangs often made
financial sense because it was cheaper to pay protection money than taxes. Experts estimated that 25-40% of Russia’s
Gross National Product (goods and services) was derived from this unofficial
“shadow economy” that is unreflected in either tax
collections or economic statistics. Even the police were powerless to combat
these factors. When a Duma member’s car
was stolen in Moscow, the police
suggested that he pay the local Mafia half of its purchase price for its return
and even offered to contact the Mafia leadership for him. The criminals also often had the capability
to outgun the police. Military weapons
were routinely stolen and sold to gangsters.
Those who crossed the gangs often met a violent death. Vladislav Listyev, a popular television journalist, was murdered in
1995 after he began an investigation of advertising revenues to “break the
circle of corruption.” As one Muscovite
commented, “Who wants to investigate Listyev’s
death? He will be next.” The 1998 assassination of Duma reform deputy Galina Starovoitova also had all
the markings of a Mafia-style hit and went unsolved.
Even the oligarchs conspired against each other. Boris Berezovsky went from being a car dealer to the owner of
a conglomerate that included banks, oil companies, newspapers, a national
television station, and the national airline within five years, no doubt
assisted in his business success by his close friendship with Yeltsin’s
daughter, Tatyana Dyachenko. In a 2000 biography of Berezovsky,
author Paul Klebnikov alleged that he plotted with
government security forces in a failed attempt to kill business rival Vladimir Gusinsky after Gusinsky’s
television network had provided extremely critical coverage of the government’s
conduct during the war in Chechnya.
Although this lawless atmosphere bore some similarity to
the “robber baron” phase of U.S.
industrialism in the late nineteenth century, there was a crucial
difference. In the U.S.,
business leaders such as Carnegie and Rockefeller engaged in what today would
be considered immoral and even illegal tactics, but at least their huge profits
were plowed back into the economy. Most
of the wealth created in post-communist Russia
was the result of financial manipulation, not production, and little of it was
funneled back through the Russian economy.
According to Interpol and the Russian Interior Ministry, rich Russians
sent more than $300 billion to foreign banks between
1991-1996. Capitalism produced more of a plunder of Russia’s
meager assets than the building of a solid economic infrastructure, or in
author David Remnick’s words, “more Capone’s than
Fords.”
The 1996 Election
·
Why were the results of the first
five years of a market economy a mixed bag of success and failure?
·
What factors led to Yeltsin’s
re-election in 1996? Was it hard to view
this as a victory for democracy?
As the term of the first Duma
expired in 1995, new elections were held in December for a full four-year
term. Yeltsin had been disappointed by
the strong support for radical nationalists and Communists in the 1993
elections and initially hoped to increase his support in 1995. As the economy weakened, however, his critics
only gained in strength. Russia’s
Gross National Product had dropped 45% since 1989. The ruble had dramatically plunged in value,
dropping from an exchange rate of 1,000 to the U.S. dollar in 1993 to 4,500:1
in 1995. Unemployment, the rising cost
of living, and general disappointment in the results of market reform combined
to produce a disaster for the Yeltsin government. Some Russians even began to exhibit nostalgia
for Soviet times. Aleksandr
Yakovenko, a pensioner from Gorbachev’s home village
of Privolonye,
was typical of many Russians who suddenly longed for the security of earlier
days:
They freed prices and suddenly the twenty thousand
rubles my wife and I had saved—we thought we could retire on it, even help our
children with it—all of it was worth no more than a taxi ride…. We were raised on communist ideology. We were used to it. For us it provided discipline, it meant education, it meant free medical care and a guaranteed
retirement. It meant that even we
provincial people could travel a little or go on vacation to rest homes.
The Communists won the second Duma elections, capturing
22% of the vote. Zhirinovsky’s Liberal
Democrats finished second with 11%, and Yeltsin’s supporters came in third with
10%. The only other party to capture
seats from the party list was a party dedicated to further market reforms,
headed by economist Grigory Yavlinsky.
Yeltsin’s term as president expired in 1996, and with the
results of the Duma election giving three times as many seats to his Communist
opposition as it had his supporters, it was not unreasonable to believe that Russia’s
experience with both a market economy and democracy could soon come to an
abrupt end. Yeltsin even briefly
considered banning the Communist Party and canceling the election, only to be
convinced by his daughter, Tatyana, and former Deputy
Prime Minister Chubais that shredding the constitution would be viewed as an
illegal grab for power and would backfire. As Russians prepared to vote for president in
the summer of 1996, the economy was unquestionably the number one issue. Five years of market reforms had brought a
mixed bag of progress and dismay.
Inflation had finally slowed, declining from
2500% in 1992 to 131% in 1995 (the 1996 annual figure would be 22%). For those who could afford them, the shortage
of consumer items was no longer a problem.
Russian stores, often virtually empty under communism, were filled with
products from around the world. Russians
now had access to VCRs, color televisions, and foreign automobiles, and
consumer spending had increased 10% over the previous year. Although only a small percentage of the
population had made great strides, the poverty rate declined from over 30% in
1992 to about 22% in 1996. Gross Domestic
Product, industrial output, and housing construction were all on the rise,
although still below 1990 levels. Ever
since the Duma had introduced huge tax rates in 1993, tax evasion had become an
ingrained aspect of the Russian economy.
At the lowest level, large numbers of goods were exchanged through
barter in order to avoid taxation. At
higher levels, many companies simply refused to pay their taxes. This failure to collect tax revenues was a
major factor in the government’s inability to pay wages and pensions. On the negative side, living standards had
fallen 50%, with a devastating effect on those who lived on pensions or other
fixed incomes. Both the average life
expectancy and birth rate had dropped dramatically, with deaths outnumbering
births 2:1. Wages remained low, at an
average of $37 per month, and government employees often had their wages
withheld because there was no money with which to pay them.
The Communist candidate for president was Gennadi Zyuganov, who
had been a vocal opponent of perestroika,
having authored a book in 1991 that had accused Gorbachev of betraying
communism. Promising that there would be
no return to Stalinist coercion, the Communists played upon fears that things
would only get worse under Yeltsin, pledging to restore basic price controls,
resume subsidies to farmers and industries, and stop the further privatization
of land and Russian businesses. Early
polls showed a likely Communist victory.
George Soros, an American businessman who had
taken a close interest in Russian affairs, advised several of the oligarchs
that the Communists were definitely going to win and cautioned them to get out
in time before they lost their lives.
At this point, the oligarchs stepped in to ensure that
there would be no return to communism.
These oligarchs, who often engaged in cut-throat business competition
agreed to work together and hired Chubais, who had administered the
privatization process that had made them wealthy, to mastermind Yeltsin’s
re-election campaign. When Chubais told
them he needed $5 million to set up a campaign headquarters, five days later it
was delivered in the form of a no-interest loan. Most importantly, two of the leading
oligarchs, Boris Berezovsky and Vladimir Gusinsky, controlled Russia’s
only two national television networks that were not totally government
owned. As a result, Yeltsin enjoyed
favorable coverage while his opponents were made to either look foolish or like
reincarnations of Stalin. In a country
as huge as Russia, national television is the by far the greatest influence on
public opinion, and, as a result of the oligarch’s support, Yeltsin’s standing
in the polls immediately began to improve.
With it unlikely that any candidate could obtain the
required majority in the first round of balloting, Yeltsin’s strategy was to
win enough votes in the first round for a run-off against a single opponent in
the second round of balloting. Yeltsin
campaigned on a strategy of positioning himself as the candidate of
stability. Maintaining that the period
of dramatic economic reform was over, he appealed to those who wanted relief
from the turmoil if the previous five years.
In addition, the government borrowed huge sums from western countries to
pay delayed wages and pension benefits.
With a steady barrage of flattering media coverage, Yeltsin’s strategy
worked. He won the first round of
balloting in June with 35% of the vote. Zyuganov finished second with 32%. Other than Yeltsin’s stronger than expected
showing, the surprise of the election was former General Alexander Lebed, who captured 15% of the vote and finished a strong
third. His support thus became crucial
to the two run-off candidates. Shortly
after the balloting, Yeltsin announced that he was appointing Lebed as his national security advisor, despite his
distrust of the general. In addition to
the wooing of Lebed, Yeltsin continued to depend upon
the support of the oligarchs who were terrified at the thought of a Communist
victory. Virtually unlimited money was
placed at Yeltsin’s disposal as well as the oligarchs’ dominance of the
media.
The biggest obstacle to a Yeltsin victory was his
declining health. Rumors that the president
was seriously ill plagued his campaign, as Yeltsin remained secluded for weeks
prior to the July run-off. As the rumors
became stronger, Yeltsin was forced to demonstrate his fitness, even to the
point of absurdity. The media ran story
after story emphasizing that the president was healthy and vigorous, even
filming Yeltsin dancing on stage at a rock concert as his aides prayed that he
would not drop dead on the spot.
When Yeltsin suffered a mild heart
attack days before the election, the fact was hidden by the friendly media.
Throughout the last days of the campaign, television
commercials constantly reminded voters of the country’s
past horrors. “No one in 1917 thought
that whole families would be executed and entire peoples destroyed,” a grave
narrator said as footage of an execution, coffins, and prison camps crept
across the screen. “Now the Communists
have not even bothered to change the name of their party…. It’s not too late to prevent a civil
war. Save and preserve Russia. Don’t allow the Red Storm.” Television aired a steady stream of
anti-communist films on the eve of the election, including Burnt by the Sun, an Oscar-winning condemnation of Stalin’s purges.
Given up as politically dead just months before, Yeltsin
won the run-off decisively, 54% to 40%.
The suppressed rumors of Yeltsin’s declining health proved to be
true. He went into seclusion immediately
after his election victory with a series of “bad colds.” Finally, in October, it was divulged that he
would undergo extensive heart surgery.
The quintuple bypass surgery (in which the president’s heart was stopped
for over an hour) was successful, but he did not return to work until the
following March.
Yeltsin’s election victory
could be credited primarily to the oligarchs who soon demanded a return on
their investment. As author David Remnick noted, after the election, “the bankers, media
barons, and industrialists who had financed and, in large measure, run the
campaign got the rewards they wanted: positions in the Kremlin, broadcasting
and commercial licenses, access to the national resource pile.” Undoubtedly, they profited handsomely from
Yeltsin’s victory. Boris Berezovsky,
one of the leading oligarchs, later told a reporter how he had paid $100
million to buy Sibneft, an oil company during the
“Loans for Shares” program, and sought Western investors for half of it. Before the election they refused, because
Yeltsin’s ratings were so low that a Communist victory appeared possible. The week after Yeltsin was reelected,
Berezovsky received an offer of $1 billion for Sibneft. Another of the leading oligarchs, Vladimir Gusinsky profited as well.
His television network, which had previously only broadcast nationally
during primetime, was given a coveted twenty-four hour position. The network, NTV, was also assisted with a
government-brokered loan in which Gazprom, the huge
government-controlled gas monopoly, provided a forty million dollar loan of
operating capital. Still another leading
oligarch, Vladimir Potanin, was made deputy prime
minister.
Yeltsin’s re-election
guaranteed that Russia
would not retreat back to a communist system; however, it was achieved at an
enormous cost. Power had essentially
been transferred to a small number of oligarchs who used their connections with
the government and control of the news media to dominate the country, both
politically and economically. The threat
of a communist resurgence had been permanently ended, not as a result of the
success of capitalism and democracy, but rather because the oligarchs who now
controlled Russian society simply had too much to lose in a communist
victory. The Boris Yeltsin of 1996 was
far removed from the courageous figure who had stood
upon the tank defying the 1991 coup. Now a sick man, he seemed powerless to combat
the corruption that had both symbolized his presidency and rescued it from
humiliating defeat in his re-election bid.
The economy, although definitely improved from the dark days of “shock
therapy,” still left ordinary Russians worse off than they had been when the Soviet
Union collapsed in 1991.
Despite the improvement brought about by the increase in government
spending prior to the 1996 election, fundamental problems in the economy
remained. Politically, the country had
failed to build permanent democratic institutions. Yeltsin’s re-election, while it possibly
prevented a return to totalitarianism, could hardly be celebrated as a victory
for democratic values.
The Last Yeltsin Years
·
What factors led to the 1998
economic collapse?
·
Why were the long-term effects of
the collapse less damaging than originally feared?
·
Why did the renewed conflict in Chechnya
help establish Putin as a strong leader?
·
What were the results of the 1999
Duma elections?
·
What factors led to Yeltsin’s
surprise resignation?
In March 1998, Yeltsin dismissed long-term Prime Minister
Victor Chernomyrdin, replacing him with a young reformer untainted by the
previous years of scandal, Sergei Kiriyenko. The Kiriyenko
government had barely begun when economic disaster struck Russia
in the summer of 1998. On June 1, the
Russian stock market dropped 10%, and by August shares had dropped to their
lowest levels in two years, falling 79% from their October 1997 high. The value of the ruble also plummeted,
dropping from an exchange rate of 6 rubles to the dollar in early August to
14:1 by early September.
The causes of this sudden decline were complicated. The biggest factor was Russia’s
enormous governmental debt. Russia’s
debt problem began with the $150 billion in international debt inherited from
the former Soviet Union but did not end there. The problem was compounded by poor tax
collections, which forced the government to borrow from the international bond
market in order to cover its expenses.
Monthly tax collections averaged only 22 billion rubles in 1998. At the same time, domestic spending totaled
25 billion rubles while interest on the government debt added another 30
billion. In 1995, the government began to sell GKOs (short-term treasury bonds pronounced geek-os) with
interest rates as high as 240% in order to meet its operating expenses. Russia
succeeded in attracting billions of investment dollars at these interest rates,
but in order to pay off the short-term debt, it was forced to borrow even more
money. The government’s hope was to
eventually convert the short-term loans to longer-term debt. This debt house of cards came
tumbling down on August 17, 1998 when the government was forced to call a
90-day moratorium (halt) on debt repayments. Fear of a general Russian default on its
debts swept the world financial markets.
Many Russian banks collapsed, closing their doors, and wiping out the
deposits of many ordinary Russians.
Several international factors also contributed to Russia’s
1998 financial collapse. One of these
factors was a collapse in Asian financial markets. As Far Eastern stocks declined, investors
panicked and attempted to get out of all emerging market (stock
markets in less developed countries) stocks.
An economist quoted in London’s
Financial Times summed up the
situation succinctly by saying: “The global financial turmoil led to a flight
to quality (safer investments) and Russia
was not an obvious destination.” Another
factor was a worldwide decline in oil prices.
Russia
is the world’s third-largest oil producing country, even though production has
dropped off sharply since Soviet times. Russia
boasts 5% of world oil reserves and accounts for 10% of world output; oil
accounted for 60% of Russia’s
exports in 1997. Prices tumbled from $21
per barrel in October 1997 to $11 in March 1998. The price drop severely cut into the profits
of Russia’s oil
companies, which in turn further adversely affected government revenues.
In the midst of the financial crisis, Yeltsin sacked Kiriyenko, attempting to bring back Chernomyrdin as prime
minister. Many analysts saw the move as
an attempt to reassure the public—and the Duma—with the return of a familiar
figure, a stolid baron of Soviet industry who had strong ties to the country’s
financial and industrial elite. Instead,
the strategy backfired as the Duma opposition and public turned on
Chernomyrdin, blaming him for much of the corruption and mismanagement that had
accompanied the last seven years of Western-style economic reforms. Twice the Duma refused to confirm Chernomyrdin,
and Yeltsin, who had forced the Duma to approve Kiriyenko’s
nomination just four months earlier, gave in, withdrew Chernomyrdin, and instead
nominated Yevgeny Primakov, a
former Communist apparatchik who
quickly won approval. Yeltsin was
hospitalized most of the fall of 1998 with pneumonia. The Kremlin, which had long insisted that the
president was simply susceptible to colds, began to acknowledge that Yeltsin
suffered from “emotional stress” and the wear and tear of age. The president’s declining health left Primakov as the de
facto (in fact, if not in law) president because Yeltsin’s health made
it impossible for him to play a day-to-day role in running the country.
Doomsday predictions
for Russia failed to materialize in the fall of 1998 and
throughout 1999. The huge devaluation of
the ruble, at least in the short term, even proved to be beneficial for the
economy. Most foreign goods simply
became too expensive to import. During
the first three months of 1999, imports fell 50% from the previous year. This provided an opportunity for domestic
industries to increase sales within Russia. As a result,
industrial production, which had steadily declined throughout the decade, rose
almost 5% during the first half of 1999.
“The crash in the ruble was the best thing that ever happened to
this country,” reported Eric Kraus, a Moscow-based banker. “The overvalued ruble meant that it was just
much cheaper to import. There was no use
restructuring industry when you could import the same goods for a quarter of
the price.” Despite the dramatic plunge
of the ruble during the summer of 1998, it stabilized in 1999, hovering between
20-25 rubles to the dollar. Inflation
leveled off as well, with prices rising only 1.9% in June and 2.8% in July, in
comparison with a one-month rise of 38% in September 1998. Russia
also greatly benefited from rising oil prices, as the price per barrel of world
oil almost doubled in 1999. This in turn
helped the government’s chronic struggle to collect tax revenue due to the fact
that oil exports are one of the easiest portions of the economy for the
government to monitor. The most
detrimental consequence of the 1998 crash was a severe curtailment of foreign
investment following the government’s default on approximately $40 billion in
short-term domestic bonds (GKOs). Since the fall of communism, the IMF (International Monetary Fund) had
given $22 billion in aid to Russia,
and the U.S.
had extended an additional $9 billion, mostly in the form of technical support
and direct investment loans. By the end
of 1999, foreign investment in Russia
was only 10% of the amount invested in 1991, a two-thirds decline since 1997. The 1998 collapse had simply burned too many
foreign investors for any talk of returning in mass to invest in Russia. “After this, Western investors would rather
eat nuclear waste,” commented one banker.
In May 1999, Yeltsin suddenly fired Primakov
and replaced him with a virtual unknown, Sergei Stepashin, a former official in the Justice and Interior
ministries. Stepashin, however,
only lasted three months. Apparently
aware that his new prime minister lacked any hope of leading the cause for Yeltsin’s
supporters in the December 1999 parliamentary elections or for being a serious
contender for the presidency in 2000, Yeltsin dismissed Stepashin
in August and replaced him with the more forceful Vladimir Putin, a 47-year-old former KGB spy.
Upon his appointment as prime minister in August 1999,
Putin moved swiftly to establish a reputation as an energetic and decisive
leader. The lean, athletic prime
minister was regularly shown on television practicing his hobby of judo in an
unmistakable contrast to the doddering (aging and ill) Yeltsin. Similarly, Putin enhanced his reputation as a
decisive man of action by renewing Russia’s
war in Chechnya. Although a peace agreement had been signed in
1996, the area remained beyond Russian control.
By 1999, kidnappings for ransom had become the order of the day; between
1997 and 1999 more than 1,000 people were kidnapped, including Russian
soldiers, foreign aid workers and clergymen.
In March, the rebels even seized General Gennady Shpigun,
the Russian Interior Ministry representative in Chechnya. As a result, Putin’s
predecessor, Sergei Stepashin,
had planned a limited invasion of Northern Chechnya.
Just days before Putin’s
appointment as prime minister, Chechen rebels invaded the neighboring province
of Dagestan in hopes of fomenting a
similar Islamic rebellion. In his first
days in office, Putin viewed the attack as a threat to Russia’s
survival: “It would have spread to Dagestan, the whole Caucasus
would have been taken away, it’s clear . . . Russia
as a state . . . [would] cease to exist.” Working with Russian generals eager to erase
the humiliation of the earlier failed campaign in Chechnya,
Putin revised Stepashin’s plans into a full-scale
invasion. In September a wave of
bombings exploded in Moscow,
killing over 300 people. Putin alleged
that Chechen terrorists were behind the attacks and ordered Russian troops to
invade the province. Taking care to
avoid the Russian casualties that had brought about widespread protest in the
previous war, Putin waged war at a distance, using planes and artillery to
pound the rebel province. Although this
policy resulted in horrific civilian casualties, Putin was viewed as a tough
leader, willing to withstand international condemnation in dealing with Russia’s
enemies. Emphasizing his toughness, he
used easily recognizable prison slang in promising to pursue the Chechen
rebels: “If we catch them in the toilet, we’ll rub them out right there.”
The war in Chechnya
soon eclipsed all other political issues as the country headed toward the
election of a new Duma (the country’s third since
1991) in December 1999. Virtually
unknown in August, by November Putin was the dominant political figure in the
country as Russians projected upon him their hopes for a leader that could
solve their country’s economic difficulties and restore some measure of civic
pride. “It seems to me that Putin
responds to the certain deficit that has been formed in the public mind, which
is a wish to see effective power, an effective politician,”
pollster Georgi Satarov
commented; “Chechnya
was a way to demonstrate effectiveness.” In the Duma elections, Putin endorsed the
previously obscure Unity Party that had been formed by a Kremlin official, Sergei Shoigu, the Minister for
Emergency Situations. Despite having no
political program, no grass roots organization, and no history, Putin’s endorsement was enough to make Unity a leading
factor in the elections and secure it the support of the rich and powerful. In the party list voting, the Communists won
24% of the vote, Unity 23%, and the Fatherland-All Russia Party, 13%. The pro-market Union of Right Forces, headed by former prime minister Sergei
Kiriyenko and including Yegor
Gaidar and Anatoly Chubais,
captured 9% of the vote, while Yabloko, another
pro-market, western-oriented party, won 6%.
The only other party to receive enough votes to qualify for party list
seats was a group led by ultranationalist Vladimir Zhirinovksy,
which won 6%. Although they won the most
votes, the Communists were now actually confined to a small minority as most of
the rest of the Duma was solidly anti-communist and could be expected to
generally support the Putin government.
“No one is afraid of the Communists any more and no one wants to be in
opposition to Putin,” said Michael McFaul of the Moscow
Center of the Carnegie Endowment
for International Peace.
The Duma elections placed Putin in a dominating position
to succeed Yeltsin in the country’s second presidential election, which was
scheduled for June 2000. His election
was virtually ensured when Yeltsin suddenly resigned on December 31. The sudden resignation made Putin acting
president and allowed him to call for an early presidential election in March.
For years, Yeltsin’s ill
health had raised serious questions regarding the future of Russia
without its only democratically elected leader, but his resignation produced a
dull anti-climax. As the New York Times reported, “most
Muscovites seemed simply glad to see an aging, obviously unwell leader leave the
scene.” In his farewell address, Yeltsin acknowledged
the pain and disappointment of the post-communist era:
Russia
must enter the new millennium with new politicians, with new faces, with new,
smart, strong, energetic people.
And we who have been in power for many years
already, we must go.
Seeing with what hope and faith people voted in the
Duma elections for a new generation of politicians, I understood that I have
completed the main thing of my life.
Already, Russia
will never return to the past. Now, Russia
will always move only forward.
And I should not interfere with this natural march
of history. To hold
onto power for another half-year, when the country has a strong man who is
worthy of being president and with whom practically every Russian today ties
his hopes for the future. Why
should I interfere with him? Why wait
still another half-year? No, that’s not
for me! It’s simply not in my character!
Today, on this day that is so extraordinarily
important for me, I want to say just a few more personal words than usual.
I want to ask for your forgiveness.
For the fact that many of the dreams we shared did
not come true. And for
the fact that what seemed simple to us turned out to be tormentingly
difficult. I ask forgiveness for
not justifying some hopes of those people who believed that at one stroke, in
one spurt, we could leap from the gray, stagnant, totalitarian past into the
light, rich, civilized future. I myself
believed in this, that we could overcome everything in one spurt.
I turned out to be too naive in somethings. In some places, problems seemed to be too
complicated. We forced our way forward
through mistakes, through failures. Many
people in this hard time experienced shock.
But I want you to know. I have never said this. Today it’s important for me to tell you. The
pain of each of you has called forth pain in me, in my heart. Sleepless nights,
tormenting worries—about what needed to be done, so that people could live more
easily and better. I did not have any more important task.
Roundly criticized during his last years in office for the
corruption that surrounded his regime, Yeltsin was still praised for
maintaining democracy through tough times. “He was an autocrat who forced himself to be
a democrat,” said Edvard S. Radzinsky,
a Russian historian and chronicler of the Romanov dynasty. “Even when he destroyed the Parliament at the
White House and had the right to arrest many people for life, he didn’t do
it. He understood that he had to set an
example.” “The conditions for democracy were created by
Yeltsin,” said Irina Khakhamada,
a leader of the liberal Union of Right Forces Party, who noted that he had put
most of the economy in private hands.
“There exists a legitimate parliament, there are direct presidential
elections. And no matter who comes to
power now, he would have to organize a total military coup, drowning the entire
society in blood, because there is no other way of switching to another
regime.” Biographer Leon Aron
believes that Yeltsin’s place in history can be summed up in one sentence: “He
made irreversible the collapse of Soviet totalitarian communism, dissolved the
Russian empire, ended state ownership of the economy—and held together and rebuilt
his country while it coped with new reality and losses.” Ordinary Russians were less charitable. “I believed in Yeltsin, and he failed to
justify my faith, and all our hopes and expectations,” said Larisa
Aliabyeva, a French teacher in southern Moscow.
Jeffrey T. Stroebel, The Sycamore School, 2000. Revised 2001.