The principal thrust of Gorbachev’s strategy, however, was a huge increase in capital investment—the traditional Soviet recipe for raising the rate of economic growth. Gorbachev promoted an ‘acceleration’ (uskorenie) that was indeed ambitious—a twofold increase in investment which, he predicted, would increase industrial output 20 per cent in the next fifteen years. He also resorted to deficit financing; given the drop in state revenues and the reluctance to limit consumption (by raising prices on deficit goods), Gorbachev chose to cover the budget deficit by expanding the monetary supply and by relying on domestic and especially foreign loans and credits. That strategy presumed that the increased investment could overcome structural problems and eventually recoup the ‘loans’ through higher rates of economic growth.
Economy: Structural Constraints
Like most of the élite, Gorbachev lacked a rudimentary economic education needed for understanding the structural problems that beset the Soviet economy. Simply put, since the 1970s the Soviet economy came to depend less on growth than the export of raw materials, especially oil, natural gas, metals, and other commodities. By the mid-1980s, that strategy foundered partly because of new global dynamics, above all the drop in prices for energy, but also because of the stagnation in domestic production. In the case of oil, for example, the price plunged from 70 dollars a barrel in 1979–81 to just 20 dollars in the mid-1980s. Simultaneously, Soviet production—which had increased in the 1960s and 1970s—suddenly faltered; the exploitation of new oil and gas fields became increasingly difficult and expensive, and precisely at a time when investment capital was scarce and needed for other sectors for Gorbachev’s ‘acceleration’. Indeed, 1985—Gorbachev’s first year as general secretary—recorded the first decrease in oil production. The future was indeed bleak: Soviet economists calculated that the country needed to increase its investment nearly fivefold merely to maintain current levels of production. Nor, when oil prices were high, had the regime built up a reserve fund; rather, having squandered the windfall of the 1970s, it increasingly had to rely on loans and credits, using export earnings to serve its mounting debt.
Agriculture was equally problematic. Confronted with unstable harvests and low productivity, the government invested heavily in agriculture and at a rate far exceeding that of Western countries. Thus, despite the priority of ‘acceleration’ and mounting economic problems, the government allocated substantial resources to agriculture (17.1 per cent of all capital investment, 1985–90). Nevertheless, the agricultural sector failed to meet domestic demand and forced the government to divert hard currency to import grain from abroad. It abjured the alternative (raising food prices), fearing that this would exacerbate popular discontent over the ubiquitous ‘deficits’. The government therefore continued to sell staples at below-cost prices—20 per cent for bread, 74 per cent for beef, and 61 per cent for milk.
As a result, Gorbachev’s government piled up budgetary deficits. On the one hand, it had declining revenues—largely because of the fall in earnings from energy exports, but also because of the sharp contraction in excise taxes (from the anti-alcohol campaign). On the other hand, the government indulged in a spending spree as it simultaneously sought to subsidize agriculture, stimulate industrial growth, import foreign goods, and keep low prices for consumer goods. To finance this budget deficit, the Gorbachev regime assumed new debts (which rose from 18.1 billion dollars in 1981 to 27.2 billion in 1988, and still more sharply over the next few years). By 1990, however, it became increasingly difficult to service the foreign debt, and authorities reported that they had to use ‘almost the entire income from the oil and gas exports’ to pay the interest on the debt. Gorbachev was well aware of the deficit and debt, but saw no alternative to the imports: ‘We have to buy, because we cannot live without this.’
International Dynamics
Gorbachev, an expert in agriculture but not in international relations, nevertheless made the latter sphere integral to his strategy for change. Above all, he believed that a resumption of détente—better relations with the West—would enable Moscow to ratchet down military expenditures and thereby free more funds for ‘acceleration’. He therefore made international relations a priority and, aided by his new minister of foreign affairs, Eduard Shevardnadze, took charge of foreign affairs and directed diplomats and party functionaries to ‘rethink’ the country’s foreign policy.
The military was indeed an immense drag on the Soviet economy—by some estimates devouring as much as 16 per cent of the GDP. Revealingly, even Politburo members knew little about the military budget and its impact on the economy; only in the autumn of 1986 did they learn that defence consumed 40 per cent of the state budget, not counting the subsidies and aid given to allies in the communist bloc and to developing countries. The sheer size of the armed forces, together with the gargantuan costs of maintaining nuclear parity, diverted critical resources that could have been funnelled towards such urgent priorities of revitalization as investment in the industrial sector. As Gorbachev stressed in May 1986, it was essential to reduce the crushing pressure generated by ‘the vice of defence expenditures’.
It was not just finances that concerned Gorbachev: he also came to believe that nuclear disarmament was an urgent priority. He was already familiar with the writings of the nuclear disarmament movement and, revealingly, authorized the return of Andrei Sakharov—a leading exponent of nuclear disarmament—from exile in Gorkii. Gorbachev’s personal commitment was greatly strengthened by the events of 26 April 1986, when a nuclear power plant in Chernobyl exploded and spewed immense amounts of radioactive materials into the atmosphere. The disaster cost dearly in terms of human life (thousands killed, nearly half a million exposed to high doses of radiation) and resources (billions of roubles). The disaster hardened Gorbachev’s resolve to reverse the nuclear arms race; as he told members of the Politburo, ‘we learned what nuclear war can be’.
All this propelled Gorbachev’s bold initiative for disarmament. In August 1985 his government announced a unilateral moratorium on nuclear tests and internally began to revise its nuclear strategy, shifting the goal from ‘nuclear parity’ to ‘nuclear sufficiency’—that is, a downscaled military which would reduce costs yet guarantee deterrence. Sensitive to economic imperatives, Gorbachev warned that Moscow must avoid being ‘drawn into an arms race which is beyond our capacity’ and which Moscow was bound to ‘lose’. Gorbachev’s charm offensive won strong support from European leaders, most notably Margaret Thatcher, the arch-conservative British prime minister, who wrote to US President Ronald Reagan that Gorbachev ‘was much less constrained, more charming, open to discussion and debate, and did not stick to prepared notes’.
The United States, however, was a hard nut to crack. The conservative administration of Ronald Reagan was aggressively anticommunist; in 1983 the president himself characterized the Soviet Union as the ‘evil empire’ and shortly afterwards announced the Strategic Defence Initiative (SDI, popularly known as ‘Star Wars’)—a defensive missile system designed to negate parity and mutual deterrence. Key officials, such as CIA director Robert Gates, dismissed perestroika as a sham and Gorbachev’s overtures as a ruse. The ideological intransigence in Washington, predictably, strengthened the hand of Politburo critics who regarded an agreement with the anti-communist Reagan as impossible. Such pessimism seemed justified by the stalemate at Reykjavik (11–12 October 1986), when Reagan—largely because of SDI—spurned Gorbachev’s proposals to achieve nuclear disarmament within a decade. A conservative like the KGB head Viktor Chebrikov thereupon argued that ‘the Americans understand only power’, and the military redoubled its demand for still more resources.
But Washington was not the only obstacle to improving Soviet–American relations: a fair share of the blame rests with Moscow itself. Gorbachev himself was loath to abandon Soviet clients in the third world, despite the fact that they cost the Soviet Union immense sums—in financial and military assistance—that the Kremlin could ill affor
d. The Afghan conflict was particularly troublesome. Although some in Moscow (including the military) endorsed rapid disengagement, Gorbachev and others feared that a precipitous withdrawal would unleash a bloodbath and gravely compromise Russia’s vital interests. As an interim solution, Gorbachev proposed to ‘indigenize’ the conflict: that is, promote ‘Afghanization’—making pro-Moscow Afghanis responsible for combating the Islamists. But that policy too ran afoul of America’s engagement, especially its clandestine support of Islamic insurgents; the Afghan question, which had ended détente, continued to weigh heavily on Soviet–American relations.
Perestroika: From Modest Renovation to Fundamental Reconstruction
Gorbachev sought to transform domestic, not just foreign policy. His central idea, ‘perestroika’, was elastic; its meaning could range from modest renovation to systemic, fundamental transformation. Initially, Gorbachev himself thought in terms of ‘renovation’ but gradually came to embrace a far more radical vision. His rhetoric reflected the shift: in 1987 the traditional ‘democratic centralism’ (a Leninist phrase denoting single-party dictatorship) gave way to ‘pluralism’, appearing first as ‘socialist pluralism’ (implying plurality of opinion) but eventually as ‘competitive pluralism’ (denoting a multi-party political system).
Gorbachev not only talked about democratization, but began to experiment with its application. He first did so in the 1987 elections to local soviets, with multiple candidates in 5 per cent of the races. But the critical breakthrough came in elections to the Congress of People’s Deputies in March 1989, when a third of deputies were elected in open territorial elections (the rest being designated by the Communist Party and by various institutions). The popular elections were open to non-party candidates and, to the shock and dismay of party élites, many leading party candidates—including prominent first secretaries in several oblasts—went down in defeat. Flamboyant oppositionists won impressive victories; Boris Yeltsin, former party leader in Moscow who had broken with Gorbachev and emerged as the leader of anti-Kremlin forces, won 89.6 per cent of the ballots.
Democratization, however, exposed Gorbachev to popular will—a hazardous vulnerability as the economic situation rapidly deteriorated. The earlier elixir—using hard-currency earnings from the export of energy and natural resources—was fast disappearing, as production, prices, and therefore earnings plummeted. Gorbachev thus found it increasingly difficult to sustain both capital investment and the import of grain and basic consumer goods. The goods shortages (defitsity) intensified, for the government declined to raise prices (for fear of popular unrest) to absorb the ‘monetary overhang’ (the gap between the rising income in paper roubles and the available goods). The inevitable result was an acute shortage of basic goods.
Gorbachev had heralded ‘glasnost’ (openness and publicity) as the motor of change, but that too served to erode his authority. The free press, especially its shocking revelations about the travesties of earlier regimes, undermined not only the regime’s legitimacy but Gorbachev’s own stature. Gorbachev had hoped to ride the wave of democratic forces, but discovered that he could not satisfy rising expectations, either material or political, and that failure inevitably took a toll on his approval ratings.
As Gorbachev embraced radical perestroika, he still held a clear preponderance of power. He had acted promptly to replace a majority of members in the Politburo and Central Committee; in April 1989 he induced 110 full and candidate members of the Central Committee to resign ‘voluntarily’ and thereby enable the influx of people loyal to the general secretary.
Growing Opposition, Shrinking Base
Even as Gorbachev consolidated power in the party, the CPSU itself was steadily losing its authority, cohesion, and legitimacy. Five months after the Congress of People’s Deputies met in 1989, the proportion of the population expressing ‘trust’ in the Communist Party plunged from 52 to 21 per cent. Even the loyalty of rank-and-file party members was quickly fading; by 1989 only 27 per cent declared that they would rejoin the party. The number of party members, which had steadily increased in the post-Stalin era, began to decline—from 19 million members in October 1988 to 15 million in August 1991.
The party also became a source of opposition, as criticism—even among Gorbachev’s erstwhile supporters—rapidly intensified. The party élite had initially acquiesced and acceded to the general secretary’s will, but increasingly came to believe that Gorbachev’s glasnost and democratization were undermining the party’s power and privilege. Glasnost had spawned a profusion of independent newspapers and journals; their shocking revelations about the atrocities perpetrated in the Stalin era not only demonstrated Stalin’s personal culpability but also exposed the party’s failure to oppose the senseless repression and terror. Nor did party leaders welcome Gorbachev’s pluralism; the profusion of organized political movements and free elections increasingly made them feel isolated and humiliated. The party élite was also alarmed by the revolutionary forces sweeping the Soviet bloc, as countries like Poland, East Germany, and Hungary openly asserted their interests and independence. The most famous challenge by the party’s old guard came in a March 1988 newspaper article by Nina Andreeva, a Leningrad chemistry teacher, who castigated the attacks on Stalin as defamatory and who denounced perestroika as a disastrous assault on the country’s basic socialist principles.
Gorbachev’s popularity also declined among the general public. Public opinion surveys showed a precipitous drop in his approval rating, while that of his critics—above all, the former Moscow party boss, Boris Yeltsin—skyrocketed. Little wonder then that, when the Congress of People’s Deputies created a presidential post in March 1990, Gorbachev decided to have the Congress (where a majority of deputies were party members) choose the first president of the USSR rather than face a general election. A popular vote meant greater legitimacy, but also greater risk. As a result, however, Gorbachev lacked the mandate given to Yeltsin when the latter, two months later, won an overwhelming majority of the popular vote to become the first president of Russia. All this emboldened the neformaly (informal political organizations) to become more assertive. ‘Democratic Russia’, established earlier (January 1990), demanded an end to the Communist Party’s monopoly of power, establishment of strict control over the KGB, creation of a ‘regulated’ market economy, and sovereignty for the Russian republic.
The mounting opposition drove Gorbachev to retreat from his radical vision and to seek the support of more conservative quarters. He became increasingly cautious, especially after the trenchant criticism openly expressed at the Congress of People’s Deputies, and sought to appeal to his base in the party. Gorbachev also spurned radical economic proposals (to replace a command economy with free markets) and created a Presidential Council that was dominated by conservative political figures. None of this, of course, endeared him to disgruntled members of the party, not to mention the more democratic, reform-minded members of the public.
The steady erosion of Gorbachev’s political power, moreover, only served to encourage the explosive nationalist movements that were gaining momentum all across the borderland republics of the Soviet Union. Such aspirations in fact had already emerged in the preceding decades, but could now burst into full view under perestroika. Indeed, perestroika—with its themes of ‘democratization and glasnost’—empowered nationalities, especially in the Baltics, Ukraine, and Caucasus, to demand more autonomy, official predominance of the indigenous language, the precedence of their own economic interests, and ultimately total independence. Gorbachev first encountered the surprising intensity of nationalist strivings in December 1986, when Kazakh students demonstrated to protest Moscow’s decision to replace the Kazakh first secretary with an ethnic Russian. Gorbachev beat a hasty retreat, exposing the centre’s vulnerability and readiness to compromise. Anti-Soviet movements were especially powerful in the Baltic republics of Estonia, Latvia, and Lithuania, the last to be incorporated into the USSR and the first to proclaim independence in 1
991.
Nationalism gave rise not only to demands for independence but also to inter-ethnic conflict, especially in areas of mixed ethnic populations (often the product of deliberate, planned settlement of Russians). Although ethnic tensions were hardly new, conflicts intensified as state power seemed to weaken and as Gorbachev sought to ‘unleash’ popular forces. The violence was especially intense in the Caucasus, most notably in an Armenian enclave inside Azerbaijan—the Nagorno-Karabakh region that soon became the focal point of armed conflict between Armenians and Azeris.
Nationalist movements also proliferated throughout the Soviet bloc. The critical turning point came in East Germany in the autumn of 1989, when Gorbachev—convinced that the regime was on the verge of collapse—refused to intercede and prop up an unpopular, faltering communist regime. Demolition of the Berlin Wall in November 1989 not only marked the end of the Soviet bloc but also demonstrated to nationalists inside the Soviet Union that the unthinkable had now become possible.
Crisis and Dissolution
The year 1991 was a watershed in modern Russian history: it marked the dissolution of the USSR into fifteen sovereign republics, the largest of which was the Russian Federation. This process, while under way before Gorbachev, accelerated sharply in the late 1980s and encouraged republic leaders to demand total sovereignty and independence, not mere autonomy.
Determined to resist this process, Gorbachev desperately sought to preserve the Soviet Union as a federal state. He first arranged a national referendum in April 1991, where a majority voted for preserving the USSR, but that could not stem the tidal wave of nationalist movements that had emerged throughout the Soviet Union. In a last attempt to save some semblance of the Soviet Union, Gorbachev laboured to win adoption of a ‘New Union Treaty’, which would transform the unitary Soviet state into a loose confederation with a common presidency, foreign policy, and military. Gorbachev persuaded a majority of republic leaders to accept the treaty and scheduled a formal signing ceremony in Moscow on 20 August 1991.
Russia A History Page 51