RUSSIA AS ECONOMIC SUCCESS STORY

...Millions employed by the state (teachers, physicians, scientists) rely on a second job (or jobs) for most of their income...

...The country's industrial production and GDP have shrunk to half what they were in 1991...

...Prosperity has been slow to reach both the perennially depressed and de-populated countryside, which never recovered from Stalinist collectivization and the losses of World War II, and the small towns, especially in the "rust belt...

...As for the middle class, its most prized possessions are roughly those of the European middle class immediately after World War II: an apartment of one's own, perhaps fitted out with modern conveniences, a small car, a dacha (a shack in the country), and an annual trip abroad...

...This means, some argue, that the Russian economy actually may have grown by 6 percent to 8 percent between 1994 and 1997, instead of the official 0.7 percent...

...The firm estimated the actual average income to be about twice the official figure—an estimate corroborated by the fact that the value of trade in goods and services in regions surveyed by the firm was 1.5 to 2 times the official figure for total wages...

...The new policies are likely to bring instead a growing black market, an unconvertible currency, hyperinflation, and shortages...

...A pair of women's winter boots and a sheepskin parka (necessities in the Russian winter) cost 120 rubles and 800 rubles respectively...

...But what about the sunny garden of Soviet socialism, in which there were no poor and hungry, we are told, and which Boris Yeltsin inherited, then wantonly despoiled...

...In 1989 the average Soviet salary was 200 rubles a month—$33 at the official exchange rate, $13 on the street...

...Yet both the radicalism and the staying power of the new economic policies will depend—assuming that Prime Minister Primakov et al...

...Yet, where it did occur, the urban revival in pre-August 17 Russia was nothing short of spectacular, as any visitor with memories of Soviet times can testify...

...To be sure, the advent of the Primakov-Duma government marks a fundamental leftward shift of economic priorities...

...At the end of the 1980s, what was delicately called the "underprovisioning" threshold (the line between those who had enough to eat and those who did not) was set at 70 rubles a month...

...Resistance to the new regime will be the stronger, and come the sooner, among Russians who remember the late 1980s—the worthless ruble, the lines around the block, the bare shelves in state stores, and the sacks of potatoes hoarded on apartment balconies...

...For most Russians most of the time, awful sausage substituted for meat...

...In this telling, subtle as agitprop, Russia amounts to seven fatcat oligarchs in a sea of starving children...

...Ration cards in Novosibirsk entitled people to 150 grams of butter a month...

...A sizable part of the Russian population thus stands to lose a great deal from a return to a socialist or semi-socialist economy...

...Car ownership in Russia grew from 18 per 100 families in 1990 to 31 in 1997—an increase of 72 percent, or about 10 percent annually...

...But in the retail and consumer sectors, the transition has been a dazzling success...

...With the crisis deepening (as it must, given the poisons being administered by the Primakov-Duma government), the new policies will collide sooner or later with expectations bred in the past few years: low inflation, the ready availability of food and goods, and, for many, the hope of seeing their standard of living rise...

...An average Soviet family with two full-time earners spent 59 percent of its income on food, at a time when the comparable U.S...

...But if in 1991 Russia rolled out between 5,000 and 7,000 heavy tanks at a cost of over $1 million each, and in 1997 it produced none, is the attendant "economic decline" or "de-industrialization" to be bemoaned—or celebrated...

...In Sverdlovsk the meat ration was one kilo every six months...

...In pre-August 17 Russia, such possessions and pursuits were within reach of those making over $300 a month (or over $1,000 in Moscow...

...In Irkutsk and Novosibirsk, rations included 340 grams of soap every three months...

...The same is true of between 50 and 70 percent of trade transacted in cash...

...In the city of Kirov, the sausage ration was 800 grams a month...

...Even if their figure is high, it should be obvious that after Yeltsin slashed defense funding by 90 percent, Russia's industrial production and GDP were bound to shrink...

...Between 1994 and 1997, Russia's personal-computer market grew by 115 percent...

...As Georgetown University's Harley Balzer noted recently in an excellent article on the new Russian middle class, this category included skilled workers in "successful industrial and commercial enterprises," small and medium entrepreneurs, middle-level managers, lawyers, accountants, teachers, journalists, programmers, drivers, and tailors...

...In today's Russia, one would have to search long and hard to find such a scene...

...In Kostroma, only those with children under three could buy children's soap, and they had to show an internal passport stamped with their children's names and ages...

...But the enterprises that produced all this "wealth" could not survive without government subsidies...

...With fish and poultry rare in most Russian cities, the main sources of protein were meat and butter...

...Russian experts estimate that at least one-fifth of the population fell into this income category...

...In the words of a popular Russian magazine, capitalism brought Russia "sneakers, jeans, modern clothes, television sets that did not explode, automatic washing machines, personal computers, effective medicines, and much more . . ." In short, while market prices, the waning of government subsidies, and privatization have hurt or impoverished millions of Russians, capitalism has significantly improved the lives of millions of others...

...In 1989 the minimum pension was raised to 50 rubles in cities and 40 rubles on collective farms...

...Wrote one columnist in the popular magazine Ogonyok in the summer of 1989, "We have become accustomed, hungry and tired after work, to tour the stores and scour their eternally bare shelves, our eyes and stomachs yearning...

...maintain the democratic institutions installed by the most open and tolerant regime in Russia's history, the Third Russian Republic, 1993-98—on how far back toward a socialist economy the public is willing to go...

...As one of the most objective veteran Western reporters in Russia, Chrys-tia Freeland of the Financial Times, put it, After seven years of painful market reform, Russia has not made much progress in restructuring the industrial behemoths that were the foundation of the Soviet economy...

...Hundreds of ATM machines sprang up across Russia in 1996 and 1997—20 of them in the single smokestack city of Chelyabinsk, 900 miles east of Moscow in the Urals...

...Pensioners were especially hard-pressed...

...Most of the growth in personal incomes has taken place in large and middle-sized cities, where about half the Russian population lives...

...The gap between the middle class and the rest of the country was narrow...

...Back in the days of perestroika, critics of the Soviet economy liked to quote a statement they attributed to Helmut Schmidt, the Social Democratic chancellor of West Germany...

...And then there were the lines, that humiliating curse that turned men and women into animals...

...In December 1990,the news agency TASS reported that two women were trampled to death when a line of several thousand people in Khabarovsk turned into a mob...

...During the glasnost years of 1988-91, it emerged that most of the Russian economy was operating at a loss...

...It is indisputable that from 1995, when deputy prime minister Anatoly Chubais brought inflation under control, to August 17 of this year, more Russians had greater access to quality food, goods, and services than at any other time in history...

...In personal consumption, the Soviet Union was 77th in the world in 1989...

...In their place were brightly dressed, leisurely pedestrians, munching on a cake or sandwich bought on the street, browsing past clean and colorful displays of produce and goods in shop windows...

...In 1995, a leading Russian sociologist cited by Balzer, Tatyana Zaslavskaya, estimated that a third of the population was doing "reasonably well," a third had suffered "enormously," and a third was "coping...

...In Archangel, the toothpaste ration was a tube every two months...

...As Yogi Berra said, sometimes you can see a lot just by looking...

...Another typical middle-class pursuit, charity, also took root: In the past 10 years, the number of independent charities in Russia grew from zero to 60,000...

...According to the World Tourism Organization, of 25 nationalities, Russian tourists were the tenth-highest spenders in 1996, behind Americans, Germans, and the Japanese, but ahead of South Koreans, Brazilians, Spaniards, and the Chinese...

...If the recent flood of media pontificating is to be believed, the answer is a resounding no...

...The crucial test of Russian capitalism and democracy is still ahead...

...Once a country in which oranges were a rarity, Russia has become a place where even the most obscure Siberian village has access to the full capitalist cornucopia of goods, ranging from computers to kiwi fruit...

...As for foreign travel, in 1997, between 16 and 20 million Russians went abroad for business or pleasure (up from below 100,000 in Soviet times)—or between one in eight and one in ten Russians...

...After visiting Russia in the 1970s, Schmidt had supposedly called it "Upper Volta with missiles...

...And as mothers proffered these delicacies to their children, I saw some draw back in surprise from the unfamiliar fruit...

...Both Russian and foreign experts agree, for instance, that at least 40 percent of Russian GDP is in the shadow economy and never reported...

...but so did produce formerly exotic and available only from the hidden stores reserved for the nomenklatura...

...Russians stood in lines for many hours daily, lines that ran around the block: for milk and shoes, fruit and cigarettes, pantyhose and toothpaste...

...The lines were gone, and so were the streams of shabbily dressed people shuffling along cracked pavements, their heads down—briefcases, sacks, or the ubiquitous nylon knitted bags in hand—from one filthy store to another in search of fruit, sausage, or cottage cheese, like gray herds of foraging beasts...

...According to the Russian government, "off-the-book" earnings for 1996 were $46 billion—or one-tenth of GDP In addition to the absence of reliable statistics, the lack of analytical categories strictly comparable to those used in the West impedes a search for the Russians who have profited from reform...

...Their minimum income ranges from $4,000 a month in Nizhny Novgorod to $10,000 a month in Moscow...

...A Russian scholar estimated that his compatriots spent 40 to 68 hours in line every month...

...figure was 15 percent...

...Indeed, once market prices were introduced in 1992, 80 percent of these companies became bankrupt overnight...

...Two years later, the iconoclastic Russian economist Igor Birman, who has chalked up an exceptionally good track record countering the conventional wisdom of Washington, concluded that "nearly three-fourths of Russian citizens live better today than they did under the Communists...

...Everyone but the handful of super-rich is worse off...

...Every third loaf of bread was made from imported grain...

...replaced by the printing of money, expansion of the public sector, state support for industry, and bloated government budgets...

...Horrendous waste, obsolete equipment, and exceedingly low productivity left enterprises taking in more in raw materials and labor than their end product was worth...

...Yeltsin took over a Switzerland and, by his drastic and heartless free-market reforms, turned it into a Somalia...

...As in every developing nation, only the very rich (the top 3 percent at most in Russia) approximate the living standard of the Western upper-middle class...

...It is further estimated that Russian families under-report their income by the same amount—40 per-cent—and that as much as 90 percent of all private-sector production is concealed from the tax authorities...

...The book business thrived...

...Publishers were free to print anything they wanted—from the Bible to romance novels, from Bill Gates's book to biographies of Brigitte Bardot, and several thousand new titles, with a total print run of 5 million, went on sale every month in Moscow alone...

...But even apart from the question of demilitarization, views of the country's economic performance in the last seven years have been badly distorted by the deliberate understating or outright concealment of income by corporations and citizens alike in an effort to avoid the taxman and organized crime...

...A nurse after 40 years of work received a 70-ruble pension, but 31 percent of pensioners in cities and 84 percent in the countryside received less than 60 rubles a month...

...Under the Soviet regime, a huge portion of the Russian economy was militarized—70 percent, according to recent statements by two of the most knowledgeable Gorbachev officials, Yevgeny Primakov (speaking before he became prime minister) and Alexander Yakovlev...

...In most pundits' view, market reform brought Russia only misery...

...It is true that Soviet Russia's GDP grew annually, as the country churned out millions of tons of steel for tanks, thousands of giant harvesters that cost a million rubles each and fell apart after one season, and fertilizer dumped in the millions of tons on exhausted fields to no effect whatsoever...

...In a single week in November 1990, 200 people were hospitalized in Krasnoyarsk with frostbite and another 63 after fainting in lines...

...The very least that can be said about Russia under Yeltsin is that it became Upper Volta (or rather, Burkina Faso) with far fewer missiles—much to the benefit of the rest of the world...

...That same year, of 211 "essential" food products, only 23 were available in state stores...

...On the days when food was delivered to the major Siberian city of Krasnoyarsk, ambulance calls increased tenfold or more...

...Private high schools multiplied: There were 177 in 1991, 1,606 in 1997...

...Any comparison with European, let alone American, patterns is meaningless...

...Already the old policies of low inflation, painful fiscal austerity, and tight money are being Leon Aron is a resident scholar at the American Enterprise Institute...

...In June 1992, six months after Yegor Gaidar freed prices, I saw something in Ekaterinburg that I had never seen before in my 37 years as a resident or student of Russia: perfect, ripe, yellow bananas sold on the street in a Russian provincial city...

...Milk, often scarce in Soviet times, became available to Russian children everywhere, without lines or rationing...

...Officially, the average monthly family income was between $120 and $130...

...Yet, according to extensive regional surveys conducted by the Russian Market Research Corporation, a Western firm in Moscow, the average household reported spending more than that each month on food and utilities...

...As Russia is convulsed by yet another of its perennial cycles of reform and reaction, Americans will be better equipped to predict and even marginally influence the next stage if we appreciate Russia's complex reality and refuse to accept caricatures as a fair representation of what is going on in Russia...

...A refrigerator cost 800 rubles...

...The point about the decline of Russia's industry and GDP is especially embarrassing...

...Like the Great Depression as depicted in Comintern propaganda, the crisis of August 17—the day that Moscow devalued the ruble, defaulted on domestic treasury bonds, and froze private foreign debt—is portrayed as an epochal event, a final verdict of failure on the Russian capitalist experiment...

...His biography of Boris Yeltsin will be published next year...

...This summer's financial crisis, we are told over and over, means the obliteration of all that has been accomplished in Russia in the past five years...

...In all, 57 million Soviet citizens were at or below the level of "underprovision-ing...