Yeltsin and his cabinet knew that the old communist order had not entirely disappeared with the USSR’s abolition. The Communist Party of the Soviet Union had vanished; Marxism-Leninism and the October Revolution were discredited. But much else survived from the Soviet period. The Russian Supreme Soviet contained a large rump which hated Yeltsin. The local political and economic élites, too, operated autonomously of Moscow; they worked with criminal gangs to promote their common interests as the market economy began to be installed. In the internal non-Russian republics of the RSFSR the leaderships talked up nationalist themes and gained local support.
The methods of communism were used by Yeltsin to eradicate traces of the communist epoch. He rarely bothered with the sanction of the Supreme Soviet, and he visited it even more rarely. He confined deliberations on policy to a small circle of associates. These included not only Gaidar and his bright fellow ministers but also his bodyguard chief Alexander Korzhakov (who was his favourite drinking mate after a day’s work). He sacked personnel whenever and wherever his policies were not being obeyed. In provinces where his enemies still ruled he introduced his own appointees to bring localities over to his side. He called them variously his ‘plenipotentiaries’, ‘representatives’, ‘prefects’ and – eventually – ‘governors’. These appointees were empowered to enforce his will in their respective provinces. In the guise of a President, Yeltsin was ruling like a General Secretary – and one indeed who showed little liking for ‘collective leadership’!8
To his relief, price liberalization did not lead to riots on the streets. The cost of living rose; but initially most people had sufficient savings to cope: years of not being able to buy things in Soviet shops meant that personal savings kept in banks were still large. Although Yeltsin’s popularity had peaked in October 1991,9 there was no serious rival to him for leadership of the country. He intended to make full use of his large latitude for the strategic reorientation of the economy. Nor did the industrial and agricultural directors object strongly to his proposals. For they quickly perceived that the liberalization of prices would give them a wonderful chance to increase enterprise profits and, more importantly, their personal incomes. Politicians from the Soviet nomenklatura, furthermore, had long been positioning themselves to take advantage of the business opportunities that were becoming available.10
Confidently Yeltsin and Gaidar proceeded to further stages of economic reform. The two most urgent, in their estimation, were the privatization of enterprises and the stabilization of the currency. The first of these was to be privatization. Its overseer was to be Anatoli Chubais, who was Chairman of the State Committee for the Management of State Property. His essential task was to put himself out of a job by transferring state enterprises to the private sector.
Chubais published projects on the need to turn factories, mines and kolkhozes into independent companies, and seemed to be about to facilitate the development of ‘popular capitalism’. But the crucial question remained: who was to own the companies? In June 1992, Chubais introduced a system of ‘vouchers’, which would be available to the value of 10,000 rubles per citizen and which could be invested in the new companies at the time of their creation. He also enabled those employed by any particular company, whether they were workers or managers, to buy up to twenty-five per cent of the shares put on the market; and further privileges would be granted to them if they should wish to take a majority stake in the company. But Chubais’s success was limited. At a time of rapid inflation, 10,000 rubles was a minuscule grant to individual citizens; and the facilitation of internal enterprise buy-outs virtually guaranteed that managers could assume complete authority over their companies; for very few workers were in a mood to struggle with their managers: strikes were small scale and few.11
Chubais and Gaidar had ceded ground because the economic and social forces ranged against the government were too strong. The administrative élite of the Soviet period remained in charge of factories, kolkhozes, shops and offices. In particular, twenty-two per cent of the Russian Congress of People’s Deputies had come from the highest echelons of party and governmental agencies of the USSR; thirty-six per cent were officials of a middling level; and twenty-one per cent were drawn from local political and economic management.12 Although about a quarter of deputies in early 1992 were committed to basic reforms, there was a drift into the embrace of the thirteen anti-reformist caucuses in the Russian Supreme Soviet in the course of the year.
Outside the Congress, furthermore, several dozens of parties had recently been formed. Lobbying organizations emerged to increase the pressure on the government. Trade unions of workers had little influence. Only the miners caused trepidation to ministers – and even miners did not bring them to heel. But directors of energy, manufacturing and agricultural companies were more effective in pressurizing Yeltsin. Their lobbyists were men who had walked the corridors of power before the end of the USSR. Most famous of them was Arkadi Volsky, who headed the Russian Union of Industrialists and Entrepreneurs. Another was Viktor Chernomyrdin, chairman of the vast state-owned gas company known as Gazprom. Even more remarkable was the decision of the Agrarian Union to choose Vasili Starodubtsev as their leader despite his having been imprisoned for belonging to the State Committee of the Emergency Situation in August 1991. Throughout the first six months of 1992 such lobbyists raised the spectre of economic collapse if existing enterprises were allowed to go to the wall.
They proved willing to bargain with Chubais. Their basic demand was that if the government was going to insist on the denationalization of companies, this should be done without ending state subsidies and without threatening the immediate interests of the directors or workers. It was only when Chubais gave way on this that the Supreme Soviet ratified his programme of privatization on 11 June. This was the last success of the radical economic reformers for a year.13 They knew that they had made compromises. But their rationale was that they had introduced enough capitalism to ensure that the members of the old Soviet nomenklatura would not permanently be able to shield themselves from the pressures of economic competition.14 Market relationships, they trusted, would eventually entail that the previous cosy relationships within whole sectors of industry, agriculture, finance, transport and trade would break down. Thus a revived Russian capitalism would consign the communist order to oblivion.
Rutskoi and Khasbulatov thought otherwise and aimed to continue stymieing Chubais’s programme. From midsummer 1992, both cast themselves in the semi-open role of opponents of Yeltsin. Usually they took care to criticize him by castigating Gaidar. But it was primarily Yeltsin whom they sought to harm.
Yeltsin gave ground to the preferences of Rutskoi and Khasbulatov. In May he had promoted Chernomyrdin, Gazprom’s chairman, to the post of Energy Minister. In July Yeltsin appointed Viktor Gerashchenko as head of the Central Bank of Russia. Whereas Gaidar wanted to decelerate inflation by restricting the printing of paper rubles, Gerashchenko expanded the credit facilities of the great companies. Inflation accelerated. Yet the public heaped the blame not on Gerashchenko but on Gaidar. In June Yeltsin had made him Acting Prime Minister in order to stress that economic reforms would somehow continue. But vehement hostility to Gaidar remained in the Russian Supreme Soviet, which rejected Yeltsin’s subsequent recommendation that Gaidar should be promoted to the post of Prime Minister. In December, Yeltsin yielded to the Supreme Soviet and instead nominated Chernomyrdin to the premiership. On 5 January 1993 Chernomyrdin introduced a limit on the rates of profit on several goods – and some of these goods also had governmental price controls applied to them. Rutskoi and Khasbulatov were delighted.
They had plentiful reason to think that Yeltsin had been given a shock that would permanently deter him. Disenchantment with him was spreading throughout society in 1992. Food production was only nine per cent down on the previous year;15 but the funds of the government were so depleted that most kolkhozes were unpaid for their deliveries to the state purchasing agencies.16 Industri
al production continued to fall. Output in the same year was down by eighteen per cent on 1991.17 Inflation was 245 per cent in January.18 Whereas kolkhozniks could survive by means of their private plots and sales of their surplus products at the urban markets, workers and office employees were hard pressed unless they had nearby dachas where they could grow potatoes and vegetables. Some folk simply cut out a patch of land on the outskirts of towns to cultivate produce or keep rabbits, pigs or even cows.
Others moonlighted form their jobs, selling cigarettes at Metro stations. Factories, mines and offices no longer asserted work-discipline: like the kolkhozes, they frequently lacked funds to pay their workers; and, being unable to maintain regular production, they no longer needed everyone to be on site in working hours. Pensioners eked out a living similarly. Many of them queued for hours in shops to buy basic products and to sell them on the pavement at double the price to busy passers-by.
The economy was reverting to ancient techniques of barter. Foreigners were astounded by the adaptiveness of ordinary Russians; but this was because they had taken too much account of official Soviet propaganda. Petty thefts from enterprises had been an established way of life in the USSR: grocery-shop counter staff kept back the best sausages; bookshop salespeople secreted the most sensational books; factory workers went home with spanners and screwdrivers. Such prized acquisitions could be traded among friends. Capitalism had not existed in the Soviet Union since the 1920s; but personal commerce had never been eliminated. Under Yeltsin, the attempt was no longer made to harass those who tried, legally or even illegally, to gain a few little luxuries in an economy where such luxuries were in constant deficit. The militia might occasionally clear the streets of pedlars, but this was usually in order to receive the bribes that were their method of surviving on inadequate wages.
Such trading was one thing; it was much harder to kick-start a market economy into motion on a larger scale. For most people, the replacement of communism with capitalism was most obviously manifested in the tin kiosks erected in all towns and cities. The goods they sold were a curious assortment: soft-drinks, alcohol, bracelets, watches, Bibles, pens and pornographic magazines. The kiosks also got hold of goods of domestic provenance which were in chronic under-supply such as razors, flowers and apples. At first there was a flood of imports, but Russian enterprises became active in production, often presenting their goods in fictitious foreign packaging (including allegedly non-Russian vodka). Prices were high, profits large.
And so popular disgruntlement grew even though the kiosks’ operations were helping to end the perennial shortage of products. Poverty of the most dreadful kind was widespread. Tent-settlements of the homeless sprang up even in Moscow. Beggars held out their hands in the rain and snow. Most of them were frail pensioners, orphans and military invalids. Without charitable donations from passers-by they faced starvation. The incidence of homelessness increased. Meanwhile everyone – not only the poor – suffered from the continuing degradation of the environment. In areas of heavy industry such as Chelyabinsk, the rise in respiratory and dermatological illnesses was alarming. Spent nuclear fuel was casually emitted into the White Sea. Not since the Second World War had so many citizens of Russia felt so lacking in care by the authorities. The old, the poor and the sick were the victims of the governmental economic programme.
Virtually everyone who had a job, however, kept it. The exceptions were the soldiers of the Soviet Army who were being brought back from the garrisons of Eastern Europe since 1990, and many were compelled to retire from service. Conditions were often dire for those who remained in the armed forces. The state construction of housing blocks had more or less ceased, and in the worst cases, public lavatories were requisitioned as military residences. Through 1992, too, contingents of the Soviet Army were divided among the newly-independent states of the CIS and a Russian Army was formed.
Russian Army contingents, however, were located not only in Russia but across the entire former Soviet Union, and uncertainty persisted as to what should be done with them. In Moscow, crowds gathered daily outside the Lenin Museum off Red Square protesting at the USSR’s dismemberment. Stalinists, Russian nationalists and monarchists mingled. There was even a man with a huge billboard offering all and sundry a cheap cure for AIDs. This congregation was menacing, but also a little ridiculous and its dottiness outdid its activism. But its members were nostalgic for the Soviet Union, for orderliness and for Russian pride and power that was echoed amidst the population of the Russian Federation. Naturally this feeling was strongest among ethnic Russians. They constituted eighty-two per cent of the Russian Federation,19 and many of them worried about the potential fate of relatives and friends living in what had formally become foreign countries.
They worried, too, about the situation in Russia. Not since the Second World War had life been so precarious. By the mid-1990s the life expectancy of Russian males had fallen to fifty-nine years and was still falling. Alcohol abuse was widespread. But most problems faced by most citizens were beyond their control: declining health care; the pollution and lack of industrial safety standards; and the fall in average family income. Even those people who had jobs were not always paid. Salary and wages arrears became a national scandal.
In other ways, too, the perils were on the increase. As the criminal and governmental organizations got closer, the use of direct violence became commonplace. Several politicians and investigative journalists were assassinated. Entrepreneurs organized the ‘contract killings’ of their entrepreneurial rivals; and elderly tenants of apartments in central city locations were beaten up if they refused to move out when property companies wished to buy up their blocks. Criminality was pervasive in the development of the Russian market economy. Governmental officials at the centre and in the localities were routinely bribed. The police were utterly venal. Russian generals sold their equipment to the highest bidder, sometimes even to anti-Russian Chechen terrorists. Illicit exports of nuclear fuels and precious metals were made; the sea-ports of Estonia were especially useful for this purpose. Half the capital invested abroad by Russians had been transferred in contravention of Russian law. The new large-scale capitalists were not demonstrably keen to invest their profits in their own country.
And so Russia did not build up its economic strength as quickly as neighbouring Poland and Czechoslovakia; and its legal order was a shambles. Sergei Kovalëv, the Russian government’s human rights commissioner, was increasingly isolated from ministers. The Constitutional Court retained a degree of independence from the President, but generally the goal of a law-based state proved elusive. Everywhere there was uncertainty. Arbitrary rule was ubiquitous, both centrally and locally. Justice was unenforceable. The ruble depreciated on a daily basis. It appeared to Russian citizens that their entire way of existence was in flux. On the streets they were bargaining with American dollars. At their kiosks they were buying German cooking-oil, French chocolate and British alcohol. In their homes they were watching Mexican soap-operas and American religious evangelists. A world of experience was being turned upside-down.
Nor were the problems of Russians confined to the Russian Federation. Twenty-five million people of Russian ethnic background lived in other states of the former Soviet Union. In Tajikestan (as its government now spelled its name), the outbreak of armed inter-clan struggle amongst the Tajik majority induced practically all Russian families to flee for their lives back to Russia. In Uzbekistan the local thugs stole their cars and pushed them out of prominent jobs. In Estonia there was discussion of a citizenship law which would have deprived resident Russians of political rights. Large pockets of Russians lived in areas where such intimidation was not quite so dramatic: north-western Kazakhstan and eastern Ukraine were prime examples. But Russians indeed had a difficult time in several successor states in the former Soviet Union.
Yeltsin hinted that he might wish to expand Russia at the expense of the other former Soviet republics, but foreign criticism led him to withdraw the remark
. Other politicians were not so restrained. Vladimir Zhirinovski, who had contested the 1991 Russian presidential elections against Yeltsin, regarded the land mass south to the Indian Ocean as the Russian sphere of influence. Widely suspected of being sheltered by the KGB, Zhirinovski’s Liberal-Democratic Party had been the first officially-registered non-communist political party under Gorbachëv; and Zhirinovski had supported the State Committee of the Emergency Situation in August 1991. His regret at the USSR’s collapse was shared by communist conservatives who obtained a decision from the Constitutional Court in November 1992 allowing them to re-found themselves under the name of the Communist Party of the Russian Federation. Its new leader Gennadi Zyuganov and his colleagues cut back on the ideology of internationalism and atheism while maintaining a commitment to the memory of Lenin and even Stalin.
The threat to Yeltsin came from such self-styled patriots. Unequivocal advocacy of liberal political principles became rarer. Several prominent critics of authoritarianism fell into disrepute: the most notable example was Gavriil Popov, mayor of Moscow, who resigned in 1992 after accusations were made of financial fraud. Sergei Stankevich, who had seemed the embodiment of liberalism, became gloomier about the applicability of Western democratic traditions to Russia – and he too was charged with being engaged in fraudulent deals. The few leading surviving liberals such as Galina Starovoitova and Sakharov’s widow Yelena Bonner were voices crying in the wilderness.
Russian politics were gradually becoming more authoritarian; and Yeltsin’s shifting policy towards Russia’s internal republics reflected this general development despite the amicable signature of a Federal Treaty in March 1992. Chechnya had been a sore point since its president, Dzhokar Dudaev, had declared its independence in November 1991. Tatarstan, too, toyed with such a project. Several other republics – Bashkortostan, Buryatia, Karelia, Komi, Sakha (which had previously been known as Yakutia) and Tuva – insisted that their local legislation should take precedence over laws and decrees introduced by Yeltsin. North Osetia discussed the possibility of unification with South Osetia despite the fact that South Osetia belonged to already independent Georgia. Yeltsin also had to contend with regionalist assertiveness in the areas inhabited predominantly by Russians. In summer 1993 his own native region, Sverdlovsk, briefly declared itself the centre of a so-called Urals Republic.20
The Penguin History of Modern Russia Page 60