Russia after Yeltsin

...What Russia is experiencing is the tail end of a long revolutionary process that has been going on from one stage to the next ever since 1917, with the final repudiation of the Stalinist postrevolutionary dictatorship in a kind of return to the democratic and socialist aspirations of the initial revolutionary year...

...Turning again to the Duma on the second of the three ballots constitutionally allowed him, Chernomyrdin renewed discussions about a political compromise, and proposed a sensational plan: first, print the money to pay back wages and pensions and jump-start the banking system...

...Yeltsin's daughter and his chief of staff Yumashov reluctantly gave in, and accepted the compromise candidacy of Foreign Minister Yevgeny Primakov as prime minister...

...Nothing said about the disastrous results of the Yeltsin era...

...Saving the banks became its paramount objective...

...His heart trouble of 1996 is well known, though along with earlier episodes it was covered up by his staff until he had surmounted the hurdle of reelection...

...Under Chubais's influence the government ousted Viktor Gerashchenko, the easy-credit head of the central bank, and attacked the problem of inflation through monetary starvation, allowing debts and wage arrears to pile up and driving much of the economy into barter deals and hand-to-mouth subsistence...

...In the meantime, not even Chernomyrdin's declaration of independence from Western economic dogma, and a "political truce" surrendering much presidential power (to which Yeltsin actually put his signature), would satisfy the Communists...

...BY THIS time Yeltsin was far removed from governmental realities and only dimly aware either of the Kiriyenko cabinet's reversing him on devaluation of the ruble or of the contradiction between Chernomyrdin's reappointment and his removal in March...

...He immediately surrounded himself with a bevy of former Gorbachev advisers, notably Academician Leonid Abalkin, who had served Gorbachev as deputy prime minister for economic reform...

...With yeltsin's political demise in the August crisis it finally became possible for Russia to reverse course...

...But Primakov's overwhelming acceptance by the Duma—without any of the conditions that Chernomyrdin was willing to accept—was a vote of relief rather than of conviction...

...Income disparities between the wealthy and the masses reached third world proportions...

...Chernomyrdin hinted at his new approach—no doubt the direction he would have preferred all the time he was under Yeltsin's thumb—when he started lobbying for parliamentary support even before Kiriyenko was actually removed...

...then, impose an "economic dictatorship" and threaten enterprises with bankruptcy or renationalization while promising fairer taxes, tariff protection for domestic producers, and perhaps a currency board on the Latin American model to stabilize the ruble...

...The Kremlin panicked," wrote Kommersant-Daily, Russia's Wall Street Journal...

...Naturally no acting elite wants to be replaced and so they decided to replace the government...

...Another adviser was Sergei Glazyev, Yeltsin's former minister of foreign trade who had broken with him over the 1993 crisis and the tight-money line of the second period...

...He obviously has a gift for intrigue...

...This year, finally, the Asian economic crisis, along with Yeltsin's erratic leadership and his installation of a cabinet under Sergei Kiriyenko inimical to the financial oligarchy, shattered the confidence of outside lenders and investors...

...and restoring state management of the economy—are likely to have disastrous results, above all for the Russian people...

...He was tolerated as Chubais's nominal chief and frontman, to avoid the confrontation with the Duma that the required confirmation of a new prime minister would provoke...

...Kiriyenko's dismissal in the depths of the devaluation crisis in August was by all accounts (including his own) the work of the financial DISSENT / Winter 1999 35 oligarchy, the "gang of seven," spearheaded by Boris Berezovsky...

...Chernomyrdin's about-face was heresy to Western governments and the international financial establishment...

...Chernomyrdin was inclined to a centrist balance of markets and state management, but to keep his new job he had to bend to Yeltsin's will throughout the crisis year of 1993...

...Moscow mayor Yuri Luzhkov and upper house speaker Yegor Stroyev were deemed too threatening to Yeltsin...

...Besides the intractable facts that Primakov faces with Russia's economy, he is limited by the time frame in which he can operate...

...In an exchange with a Russian historian, I suggested that Russia had Russified communism more than communism had communized Russia...

...Whether this will work for Russia, or whether it will break down in a new cycle of revolutionary violence as happened in mid-nineteenthcentury France, is a question that still hangs over this tragically troubled country ROBERT V. DANIELS is professor emeritus of history at the University of Vermont and author, most recently, of Russia's Transformations: Snapshots of a Crumbling System...

...Primakov's background is familiar by now—a Middle Eastern specialist and journalist with presumed KGB duties, made a top foreignpolicy adviser and candidate member of the Politburo by Gorbachev (the same rank that Yeltsin attained), and then under Yeltsin foreign-intelligence chief and foreign minister...

...Having faced down the coup plotters of August 1991 and having presided over the collapse of Communist Party rule, Yeltsin embraced the free-market theory touted by Yegor Gaidar and the new school of Russian economists enthralled with the antigovernment doctrines of the Chicago School...

...Berezovsky is a modernday Rasputin...

...Though most Russian economists found what Chernomyrdin called "a backed and controlled emission" unavoidable, powers ranging from the International Monetary Fund to the United States Treasury threatened to punish the Russian government by cutting off further aid, including the second installment of the promised IMF bailout loan...

...As old as Yeltsin and a declared noncandidate for the presidency himself, Primakov will at best lead a caretaker government until the elections of the year 2000...

...Gor38 DISSENT / Winter 1999 bachev's perestroika, based on "socialism with a human face" and a mixed economy, reflected the aspirations of most mass parties in 1917, whereas Yeltsin's reference points were the semiconstitutional czarism of 1905-1917 and the laissez-faire utopianism of Western theory...

...Since that time, in his obvious befuddlement, Yeltsin has largely become the puppet of his staff, his daughter Tatyana Dyachenko, and whoever gets the ear of the real decision makers, who periodically put the president on radio and television to make it appear that he is in charge...

...The cumulative disaster of this course was evident early on to anyone not disabled by the ideological blinders of the Chicago School economists, but the crisis of August 1998 finally drove home (to everyone but President Clinton and his advisers, it seems) the futility of proceeding on the path of Yeltsin-style "reform...

...This was the now almost forgotten accomplishment of Chernomyrdin, during his short-lived return to the prime ministership...

...This change was reflected immediately in the negotiations that Chernomyrdin conducted with the Duma leadership, to reach a deal on the basis of a more powerful role for the Duma in return for silence on impeaching Yeltsin for the rest of his term...

...Unfortunately this promising potential was unthinkingly scuttled by the Communists...

...The bankers got through to Yeltsin's daughter and his chief of staff (and former ghost-writer) Valentin Yumashov, who traveled personally to the president's dacha with the necessary documents for him to sign, restoring Chernomyrdin...

...This week we had planned to put a number of banks under government administration . . . and to begin bankruptcy procedures against major companies," explained Kiriyenko's mentor, the fallen deputy prime minister Boris Nemtsov...

...The brief statement appointing Chernomyrdin that he read on television on August 24 only blamed the global financial crisis, to answer which, "We need what are known as heavyweights...

...Maslyukov's appointment did not sit well with the major party leaders...

...One more vote would determine an orderly transition with Chernomyrdin or a mandatory dissolution of the Duma that risked national chaos and, in the minds of some, civil war...

...Out of these narrow considerations he twice vetoed the Chernomyrdin candidacy that would have put the prime ministership squarely under the thumb of the parliamentarians...

...But Communist Party Secretary Gennady Zyuganov and his more orthodox followers balked at Chernomyrdin as Yeltsin's designated successor to the presidency, and Yeltsin's statement of August 28 about not quitting until the year 2000 played right into their hands...

...A further appointment unsettling to the world of conventional finance was Viktor Gerashchenko's return to the central bank to implement the easy-money, currency-emission promises that Primakov had inherited from Chernomyrdin...

...At the same time, privatization was stepped up, especially in natural resources, cementing in place the oligarchy of crony capitalism...

...It left DISSENT / Winter 1999 37 Primakov far freer of the Duma than Chernomyrdin would have been, responsible to no one other than the president who had nominally appointed him...

...Maslyukov had become a Communist Duma deputy, but leaned to the moderate faction, and actually entered Kiriyenko's government last summer as minister of industry and trade, to the considerable annoyance of Zyuganov and the orthodox Communists...

...Capital accumulated from speculation or from natural-resource exports was squirreled away in Swiss bank accounts and London real estate, to the tune of perhaps $100 billion a year, offsetting all the foreign aid, loans, and investment that came into Russia...

...Entering immediately into formal negotiations with the Duma to get himself confirmed as prime minister, Chernomyrdin decreed emergency restrictions on hard-currency trading in order to stanch the run on the ruble...

...KIRIYENKO'S prime ministership, initiated by Yeltsin's whim, was the new Russia's low point as far as representative government is concerned...

...I am not resigning and I will serve out my term...

...This was the real shock therapy, or rather economic bleeding, like the medical treatments of yore...

...They did not stop to reflect that Western governments, the United States included, "print" money all the time by borowing from their central banks and manipulating the national credit supply...

...It would be a "mobilization regime...

...The post-Stalinist era has still not been an easy time, with its oscillations between the left and right variants of the early revolutionary ideal represented by Gorbachev and Yeltsin respectively...

...Under Gaidar as the first postcommunist economic chief and acting prime minister, Russia launched into reform: price controls were removed, inflation soared, and state-owned assets were indiscriminately privatized, all to the advantage of former Soviet managers and the banking conglomerates that quickly sprang up...

...Primakov ended with a largely undistinguished cabinet of deputy ministers promoted to fill unclaimed vacancies, while the West professed grave unhappiness: Clinton's ambassador-at-large to the Commonwealth of Independent States told a congressional committee (September 15), "Prime Minister Primakov's . . . Do-it-Russia'sway' prescription can be a way of coping, of building political support for difficult reforms, or it can be a recipe for disaster...

...At this critical point it was the Yeltsin staff, torn apart by the issue, that blinked...

...Instead, "In today's global economy, there is no real 'third way...

...Now, under Primakov's aegis, Russia is headed gingerly back to the left, not toward Stalinist barracks socialism but toward some sort of New Deal or social-democratic model...

...Yeltsin turned economic policy over to the arch-privatizer and free-marketeer First Deputy Prime Minister Anatoly Chubais, and Chernomyrdin had to go along again despite repeated humiliations...

...The newly elected Duma, though its majority were oppositionists of the Communist and nationalist persuasions, was virtually powerless, and the prime minister served at the pleasure of the president...

...The policies they propose—printing money...

...Free trade drowned native industry and agriculture in a flood of imports, including as much as half the country's food consumption (the balance being produced mostly in private gardens...

...Even the choice of Chernomyrdin's successor, the luckless Kiriyenko, seems to have been pressed upon Yeltsin, who at first thought he could—unconstitutionally —nominate himself to the vacancy...

...HAS RUSSIA been going through a new revolution...

...Most of the time during Kiriyenko's five-month tenure of the prime ministership Yeltsin was sick or vacationing, appearing in public only for ceremonial occasions or to stubbornly deny the gathering financial crisis of those months...

...The Kremlin began frantically searching for a candidate capable of replacing not only Kiriyenko today, but also Yeltsin tomorrow...

...Against the backdrop of a falling ruble, surging prices for the imported goods that Russia had come to depend on, and panic buying, on September 7 the Duma turned Chernomyrdin down again, 273 to 138 (Vladimir Zhirinovsky's nationalists shifted from the abstention column to back the sinking prime minister...

...Underway here, with the apparent blessing both of the Communists and of the financial oligarchy, was the repudiation of the whole economic program that the Russian government had pursued ever since 1991...

...A so-called trilateral commission representing the Duma and its moderate Communist speaker Gennady Seleznyov, the new prime minister, and the presidential staff was formed to work out the political and economic compromise that Chernomyrdin had outlined even before his nomination, including protections for Yeltsin and his family after his expected departure from office...

...After that he made no public appearances whatsoever throughout the ensuing political crisis, except for the September 2 summit charade with Clinton and then to read (again on television) his statement of September 10 nominating Yevgeny Primakov as prime minister after Chernomyrdin's rejection by the Duma...

...This was the closest approach to the European parliamentary principle and truly representative government that Russia had ever seen...

...These were the people who, it was hoped, would steer Russia back to the balance between the state and the market that Chernomyrdin had already outlined...

...RUSSIA' S LEADERSHIP has been overdue for renewal if only on account of the president's disabling physical and mental condition...

...Chernomyrdin's experience and gravity are necessary"—and, Yeltsin added, qualified him to run for president in the year 2000...

...He thought he had a victory when the Yeltsin staff accepted Primakov as a compromise candidate—"We are in power now...

...His key appointment was Yuri Maslyukov, formerly Gorbachev's economic-planning chief, as first deputy prime minister for the economy...

...Said Nemtsov, "The main task that has now been set for Chernomyrdin is to save the oligarchs...

...A few days later Yeltsin intervened on his own (on television, August 28) to deny rumors that he was about to resign: "I'm not going anywhere...

...Russian economic policy under Boris Yeltsin, like the breakup of the Soviet Union, was driven neither by ideology nor by practicality, but rather by Yeltsin's personal vendetta against Mikhail Gorbachev and a determination to undo everything the latter stood for...

...The true failed utopian experiment was Russia's adventure in free-market capitalism from 1991 until this year...

...Party Secretary Zyuganov was evidently piqued at the role played by his rival of the moderate Communist faction, Speaker Seleznyov, and could not contain his rancor over Chernomyrdin's years of submissiveness to Yeltsin...

...In reality communism ceased to be much of an experiment within months after the October Revolution...

...This is a condition to which contemporary economists, obsessed with the inflation monster, have given practically no thought...

...The liberal Yavlinsky was put out because he was only offered the post of "second" first deputy prime minister...

...The President's week-long silence showed that he is incapable of assuming responsibility...

...Foreign money fled Russia, the stock market collapsed, and the ruble broke...

...True, the Russian press and political circles have speculated for years about Yeltsin's pattern of frenzied bursts of activity followed by unexplained periods of withdrawal from the public stage, suggesting alcoholism or bipolar syndrome or a combination thereof...

...He is no longer the same Chernomyrdin," explained the upper house of Parliament in giving him an advisory endorsement...

...This was a thoroughgoing rejection of the post-1994 phase of Yeltsinism...

...wage, price, and capital controls...

...What was already clearly bankrupt here was the laissez-faire, tight-money philosophy that Chernomyrdin had felt compelled to go along with in the years when Yeltsin was still in the driver's seat...

...The leader of Chernomyrdin's parliamentary group, Alexander Shokhin, initially agreed to be deputy prime minister for finance, but quit because he couldn't work with the other old faces...

...In fact, Russia's post1994 tight-money policy was paralyzing the economy through a sort of monetary anemia...

...curb hard-currency trading and compel exporters to turn their earnings over to the state in exchange for rubles...

...Paradoxically, it is better for him and for representative government in Russia that an enfeebled Yeltsin continue in office until that time, letting Primakov manage the country's crisis, and avoiding the added chaos of an early-term presidential contest that would be brought on if Yeltsin should die or resign prematurely...

...Probably Yeltsin's last act of independent political volition was his decision last March to sack Chernomyrdin, by then his prime minister of five years' standing, evidently because Chernomyrdin's future presidential ambitions had become overly visible...

...A second, even harder-edged period of "reform" set in after Yeltsin blasted the old Parliament out of existence and imposed a Constitution made to order for his own authoritarian instincts...

...Perhaps the speaker forgot that this was a formula coined by Lenin...

...Chernomyrdin's return in August pointed to a decisive shift in the power base of the executive branch, from the fiat of the infirm presidency to the blessing of the restive legislative branch...

...on August 31 his Corn36 DISSENT / Winter 1999 munists with their Duma allies and Grigory Yavlinsky's liberals voted Chernomyrdin down on his first try, 251 to 94...

...The trilateral negotiations continued to work out new directions both politically and economically—Duma support for Chernomyrdin in return for reviving parliamentary government (subjecting cabinet ministers, as well as the prime minister, to Duma confirmation), and tough state intervention in banking and international capital flows, with currency emission and possible price controls...

...The disruptiveness of Gaidar's reforms aroused the ire of the existing parliament—the Russian Supreme Soviet elected in 1990—and Yeltsin compromised in December 1992 by installing the former gas-industry minister Viktor Chernomyrdin as prime minister...

...What has happened," wrote Izvestia, "is not just a change of horses in mid-stream, it is a change of parachutes in mid-jump...

...They understood .. . that there might be serious changes in ownership and that the current oligarchy might come to an end...

...Paul Krugman of MIT is an exception...

...That would be an exaggeration, even going back to the collapse of Communist rule in 1991...

...Nothing then stood between Russia and dictatorship...

...Nevertheless, despite his overwhelming endorsement by the Duma, most parties were unenthusiastic about participating in the coalition cabinet that he hoped to form...

...The only thing that saved the country from the sce34 DISSENT / Winter 1999 nario of Napoleon III in France in 1851 or that of Augusto Pinochet in Chile in 1973 was the president's state of health and his cycles of inactivity...

...Zyuganov disliked him for his independence, and refused to send any more Communists into the cabinet...

...To this end, he proposed a coalition government and an economic agreement with the Duma, where the Communistled majority was simultaneously considering the end of privatization, the imposition of currency-exchange controls, and printing money to cover salary and pension arrears...

...I agree," he replied, "and the same thing is happening with capitalism...

...hence the return to the familiar Chernomyrdin as prime minister...

...But it was not enough for Zyuganov...