The very prospect of such a treaty precipitated a last-ditch attempt by conservative élites, including his own vice-president, the chief of the KGB, and some military officers, to attempt a coup d’état. When Gorbachev left Moscow to take a holiday at his summer retreat at Foros in the Crimea (with plans to return to Moscow in time for the signing ceremony on 20 August), that gave his adversaries (including some whom Gorbachev had appointed to bolster his power) an opportunity to launch a putsch. The scheme immediately went awry. The conspirators had expected Gorbachev to acquiesce; when they dispatched emissaries to demand that he surrender power, however, they met with a categorical refusal. Although some participants later claimed that Gorbachev acquiesced (even colluded), the preponderance of evidence shows that he categorically opposed the cabal of conspirators. Placing Gorbachev under house arrest, the conspirators declared a national emergency and established a State Emergency Committee ‘to manage the country and effectively maintain the regime in a state of emergency’. Ill prepared and poorly led, they failed to establish control over the ‘force ministries’ (including the military), lacked any semblance of a coherent plan to seize power, and within three days capitulated in ignominious defeat. The most famous, enduring legacy of the ‘putsch’ was the image of Boris Yeltsin, astride a tank in downtown Moscow, leading those opposed to the coup and emerging as the victorious hero in the whole affair. Shortly afterwards, at Yeltsin’s insistence, Gorbachev outlawed the Communist Party, thereby dismantling the institutional bastion of the Soviet political system. The putsch also gave the republics an easy opportunity to declare independence, and within days, at most weeks, they hastened to do so, a process that culminated in a Ukrainian referendum of 1 December 1991, when over 90 per cent of the electorate voted in favour of independence.
Formal dissolution of the USSR came a week later. On 8 December 1991 the leaders of the three main Slavic republics—Russia, Ukraine, and Belarus—gathered at a Belorussian natural reserve called Belavezhskaia pushcha to consider the future of the USSR. The three parties, without consulting the other twelve republics, agreed to dissolve the USSR and signed what became known as the Belavezh Accord. Later that month, representatives from most republics (except Georgia and the Baltic states) convened in Alma-Ata and agreed to create the ‘Commonwealth of Independent States’. On 25 December 1991 Gorbachev resigned as president of the USSR; the Soviet Union had ceased, even nominally, to exist.
Constructing the Russian Federation
As one of the newly independent states, Russia inherited the lion’s share of the Soviet Union’s assets, land, and population. But dissolution did not mean resolution: the fifteen republics were still closely entangled, with interdependent economies and complex interspersing of ethnic groups. Most Russians, for example, resided in the Russian Federation, but another 25 million ethnic Russians resided in the ‘near abroad’—the other former Soviet republics. It was one thing to dismantle the Soviet state; it was quite another to disentangle the knot of economic, ethnic, and cultural ties that had been forged over the many decades of tsarist and Soviet rule.
Nor was the Russian Federation itself a cohesive unit. Apart from the substantial ethnic and religious minorities, it lacked the set of independent political institutions needed to resolve critical problems and differences. Yeltsin had disestablished the Soviet Union and had outlawed the Communist Party, but did not have an alternative political base and organization. He had made tactical alliances with nationalist and democratic movements, but showed a commitment to neither; elected president of the Russian Federation in 1991, for the next eight years he lacked a coherent vision and programme and instead concentrated on the consolidation of ‘presidential’ powers. Throughout, Yeltsin had to combat an independent, oppositionist parliament, which only reinforced his predilection to rule imperiously rather than govern democratically. He initially had a legal mandate for that authority: in the twilight of the Soviet Union, the Russian Congress of People’s Deputies gave him broad powers, but for only one year, with 1 December 1992 as the date for their expiration. Yeltsin used that power to convert the Soviet administration into Russian institutions, sometimes by simply renaming them, but often by conducting more fundamental reorganization. He also created a para-governmental apparatus directly responsible to the president (the ‘Presidential Administration’), which steadily grew in size and power.
Yeltsin’s most fateful decision was to embrace fully the so-called ‘shock therapy’, a radical prescription for an accelerated transition from a command economy to free markets. It was based on the prevailing neoliberal nostrum, which included deregulation of prices, privatization, and budget austerity, with the goal of a rapid transition to a more efficient, competitive economic system based on the Western model. Gorbachev had rejected this formula, but Yeltsin had no such inhibitions; he believed that it would produce instantaneous results and also elicit Western aid and credits. His acting prime minister, Egor Gaidar, firmly believed in the neoliberal programme which celebrated the end of the Cold War and seemingly heralded the global triumph of Western, free-market democracy.
That neoliberal prescription, as Gorbachev had foreseen, entailed enormous costs. First, it failed to generate the anticipated windfall of revenues from the privatization of state property and from a higher level of productivity. On the contrary, it led to a sharp decline in production and prices for energy exports, leaving the government insolvent. Moreover, dissolution of the USSR sundered the ties that characterized the interdependent, autarchical Soviet economy; factories dependent on other republics—for resources or markets—suddenly had neither. As production and trade contracted, the government saw a corresponding decline in tax revenues. But Moscow was fearful of slashing expenditures: it dared neither to reduce social services (health care, education, and pensions) nor to cut subsidies to state enterprises (which would only swell the ranks of the unemployed). Instead, Yeltsin printed money with abandon, with the inevitable result of astronomical inflation—a mind-boggling increase of 2,609 per cent in 1992, which wiped out years of individual savings and left the entire economic and social edifice in total shambles.
This social and economic crisis formed the background to rising tensions between President Yeltsin and the parliament, which only intensified once Yeltsin’s extraordinary powers expired in December 1992. Parliamentary and presidential sides negotiated but failed to reach an agreement, especially on the difficult issues facing a country in post-communist transition. In April 1993 Yeltsin arranged a national referendum on his draft constitution, but won by a bare majority. That heralded an open confrontation between Yeltsin and the parliament, impelling each to manoeuvre and seek popular support. By the autumn of 1993, in the face of impending economic collapse and mass discontent, a desperate Yeltsin resorted to raw force and illegal, non-constitutional means: on 21 September 1993 he disbanded the parliament and announced plans for elections and a referendum on a new draft constitution. The parliament actively resisted Yeltsin’s d’état; the president stormed the parliament, crushed the opposition (with nearly 200 killed and hundreds more wounded), and reiterated plans for a constitutional referendum and new parliamentary elections.
The balloting in December 1993 did nothing to resolve the political crisis. In the referendum, a majority of voters approved the Yeltsin constitution, but by a slim majority; given the low rate of voter participation, less than a third of the electorate approved the new constitution—and even these did so before Yeltsin released the actual text of this foundational document. Nor did the parliamentary elections (to what was now called the ‘State Duma’) give Yeltsin a reliable legislature; on the contrary, the opposition had a clear majority (with the Communist Party the largest contingent) determined to combat Yeltsin every step of the way. For the next six years Yeltsin had to govern without parliamentary support, and that only reinforced his predisposition toward personal rule and gravely complicated the government’s capacity to identify and resolve critical problems.
The Yeltsin Presidency
Boris Yeltsin reigned but did not rule. Although he claimed broad authority and built a personal (‘presidential’) administration to exert his will, Yeltsin actually had limited power. At the central level an oppositionist Duma fiercely contested his policies and sabotaged his legislative agenda. The new Duma elections in December 1995 did not help: the result was a two-thirds anti-Yeltsin majority (with the Communist Party ascendant), which was still more obstreperous, feeling empowered by the vote, Yeltsin’s low approval ratings, and keen awareness of the country’s desperate economic situation. But the Duma had only negative power: it could obstruct, but not impose its own will or chart a new direction. The Yeltsin constitution of 1993 sought to create a ‘super-presidency’ and therefore limited the parliament’s power to initiate legislation, check the executive branch, and impeach Yeltsin and his officials. The Duma did have the power to reject the president’s nominee for prime minister, but could do so only at its own peril: after three negative votes, the president could dissolve the Duma and call for new elections. That would force Duma deputies to risk losing their privileges and perquisites, a gamble that few deputies were willing to take. Once approved, the prime minister and his administration were not accountable to parliament. Nor did the Duma, given the reports of corruption and scandalous behaviour (fisticuffs and brawls during its august sessions), enhance its stature in public opinion. Still, as Yeltsin’s popularity plummeted and the domestic economic crisis deepened, the Duma had ample opportunity to trumpet the regime’s incompetence and corruption. The Duma dramatically demonstrated its amour propre and authority in September 1998, when it forced Yeltsin to withdraw his original nominee for prime minister and to accept a candidate—Evgenii Primakov—who enjoyed the enthusiastic support of the Duma, not the president.
Lacking the support of either the electorate or the parliament, Yeltsin became ever more imperious and erratic. As his threat to cancel elections in 1996 revealed, he was hardly a convinced democrat; faced with universal unpopularity, he acted more like a party boss determined to impose his will, regardless of the Duma or public opinion. Most, including former close associates, concur with a former press secretary that Yeltsin ‘has no ideology of his own except the ideology of power’. For Yeltsin, ruling meant decreeing: in 1996, when the Duma passed 230 laws, the president promulgated 1,000 personal ukazy (decrees) and signed another 2,000 edicts and directives from his Presidential Administration. Apart from ‘ukazomania’, Yeltsin showed a strong penchant for wilfulness, with no apparent purpose other than to remind his entourage who was boss. During one yachting trip in Siberia, ‘Tsar Boris’ became furious with an aide and had him thrown overboard; another aide, positioned on the lower deck, saw the figure soar past, extremities wildly flailing, and at first glance thought it to be some exotic Siberian fowl. Yeltsin’s fondness for drink did not help; after imbibing the president was reportedly fond of drumming out rhythms on the foreheads of hapless aides and allegedly even bestowed this honour on President Oskar Akaev of Kyrgyzstan. Yeltsin turned the state cabinet into a royal court.
The court did not want for new faces: Yeltsin’s self-assertiveness expressed itself most dramatically and destructively in a high turnover of top officials. After Yeltsin sacked Viktor Chernomyrdin as prime minister in March 1998 (for appearing more presidential than the president), the country witnessed a parade of four different prime ministers in sixteen months. The Kremlin turned into a game of musical chairs; altogether, during his second term, Yeltsin had five prime ministers, three foreign ministers, three defence ministers, five finance ministers, five chiefs of staff, and seven heads of the national Security Council. Worse still, competence and tenure appeared to be inversely related, as the hasty dismissals of Aleksandr Lebed (as secretary of the Security Council in November 1996) and Evgenii Primakov (as prime minister in March 1999) attest. Given Yeltsin’s inability to govern, the turnover only accelerated the breakdown of rational, orderly governance.
It also flung the door wide open to corruption, with inordinate influence devolving upon close advisers and supporters, collectively known as the ‘Family’. An inner circle dominated by Yeltsin’s daughter (Tatiana Diachenko, officially appointed a paid presidential adviser in 1997) controlled access to Yeltsin and shaped decision-making. The entourage included some ‘oligarchs’, rich businessmen who had amassed fabulous wealth by dubious means and connections to high officials, and who repaid the favours by financing Yeltsin’s re-election in 1996. This élite included figures like Boris Berezovskii (former mathematician, car dealer turned plutocrat), who openly boasted that the oligarchs controlled ‘50 per cent of the Russian economy’, played a critical role in Yeltsin’s re-election in 1996, and therefore claimed the right to ‘occupy the key posts in the government and to benefit from the fruits of victory’. Berezovskii himself became deputy head of the Security Council; another oligarch, Vladimir Potanin, served as deputy prime minister responsible for economic policy. But the oligarchs soon squabbled over the spoils of victory and used their control of the media to disseminate kompromat (compromising materials) about top officials, further eroding public trust in the Yeltsin government.
As the ‘centre’ imploded, the eighty-nine ethnic republics and regions became increasingly independent and assertive. In his struggle with Gorbachev, Yeltsin himself had encouraged centrifugal tendencies by urging local authorities to withhold taxes and act on their own—most vividly telling the leadership in Tatarstan in 1990 to ‘grab as much sovereignty as you can swallow’. The breakdown of central authority accelerated after the collapse of the Soviet Union, as republics and oblasti all across Russia withheld taxes, proclaimed ‘sovereignty’, appointed officials, and—in seventy of the eighty-nine regions—adopted laws and constitutions at variance with the federal constitution and laws. In Yeltsin’s second term, as the political and economic crisis deepened, some regions adopted price and export controls to protect their citizens. As in the case of the oligarchs, Yeltsin dispensed privileges and property in exchange for political support, codifying such deals in bilateral treaties with over half of the regions.
A critical factor in the breakdown of the central government was its inability to collect taxes from citizens and enterprises. Thus, between 1989 and 1997 state revenues fell by nearly 45 per cent, partly because the regions reduced the transfer of revenues, partly because individuals and enterprises simply refused to pay taxes (in 1997, only 16 per cent of the taxpayers paid in full and on time, 50 per cent partially and belatedly, and 34 per cent nothing at all). When the government proposed tax reform for small businesses, petty entrepreneurs were aghast: ‘Don’t do anything: it is fine as it is! We evade all taxes, from the profit tax to the value-added tax. We’ve learned how to circumvent all the assessments for social services.’ Yeltsin had partly ‘legalized’ the tax evasion by making special deals with influential companies; others simply refused to pay (the top eighty enterprises accounted for 40 per cent of the tax arrears). Other factors behind the decline in tax revenues included the breakdown of the state apparatus for tax collection, the proliferation of a ‘shadow economy’ unrecorded in accounting books, and corruption vigorously promoted by organized crime. Tax collection came to resemble civil war: in 1996 twenty-six tax officials were murdered and eighteen tax offices subjected to bombings and armed assault. In October 1997 Yeltsin conceded the magnitude of the peril and established an ‘extraordinary commission’ (invoking the same Russian initials as the first Soviet secret police, VChK) to collect taxes. A desperate government imposed a plethora of new taxes (more than 200 separate taxes were on the books in 1997), but these were riddled with special-interest concessions and open to arbitrary interpretation and manipulation. By the late 1990s, government revenues amounted to a mere 16 billion dollars—equivalent to 1 per cent of the revenues flowing into the US Treasury.
A poor state is a corrupt state: underpaid civil servants, from ministers to militiamen, openly demanded bribes. Venality
permeated the highest ranks of the government; the most sensational case involved accusations by Swiss investigators that Pavel Borodin (a Kremlin official in charge of presidential properties and patron of the future president Vladimir Putin) had accepted 65 million dollars in kickbacks from two Swiss firms for contracts to renovate Kremlin properties. Corruption also created opportunities to appropriate state assets at a nominal price. One oligarch observed in 1997 that politics was the most lucrative business in Russia—a candid allusion to insider deals, special privileges, and ‘fire-sale’ prices on state property for those with the right political connections.
As tax revenues plummeted, the state had to cut back on basic services—from law enforcement and national defence to education and public health. Although the number of state employees increased (especially those in the ‘Presidential Administration’), the government steadily reduced its allocations for essential services. The budget for law enforcement, for example, fell by 17 per cent; the inevitable result was a personnel flight that hobbled not only the Interior Ministry but even the fearsome KGB (now the FSB, the Russian abbreviation for ‘Federal Security Service’). This breakdown led to a privatization of violence, as private security firms—non-existent in 1992—swelled to 10,804 firms with 156,000 employees in 1998 (of whom 23 per cent came from the Interior Ministry and 8 per cent from the FSB).
Russia A History Page 52