Russia Needs a Change

Russia Needs a Change

The unfolding Russian crisis goes to the very heart of the policy course chosen by Boris Yeltsin seven years ago.


The unfolding Russian crisis is not just a “bump on the road” of the democratic, free-market reforms that are supposed to have been under way in Russia since 1991. The crisis goes to the very heart of the policy course chosen by Boris Yeltsin seven years ago. In fact, it marks the total failure of that course.

It is true that the situation in the country seven years ago was very difficult. The mistakes my government made in economic policy during the years of perestroika, coupled with deliberate efforts by perestroika‘s opponents to shatter the country’s financial system, had brought about the collapse of the consumer market. The attempt by the reactionaries to turn back the clock, in the failed August 1991 coup, triggered a sharp backlash, with the other Soviet republics running away from the Union center. Still, there was a clear choice–either to move forward firmly but prudently, step by step, reforming both the economy and the Soviet Union, or to plunge into a reckless political and economic adventure.

Yeltsin wanted the latter course, not only because he always preferred “strong medicine” but also because irresponsible radicalism, or what others would call extremism, was his shortcut to power and one-man rule. For that, he was prepared to go a long way, even to the point of breaking up the country. Prosperity was right around the corner, Yeltsin told the people: Once Russia got rid of the burden of other republics and reformed the economy via “shock therapy,” it would take just two or three years to become one of the world’s most prosperous countries. And the sad truth is that people believed and supported him.

Yet it was this decision to break up the Union and subject the economy to shock therapy that predetermined Yeltsin’s failure. The root cause of the current collapse lies there rather than in the “intrigues of the opposition” or the consequences of the Asian economic crisis.

Yeltsin’s policies abruptly broke the production and market integration that linked Russia and other former Soviet republics much more closely than even the European Union. As the republics pursued uncoordinated financial and economic policies, their ability to reform successfully was undermined. Precipitate decontrol of prices led to a sharp decline in real incomes and made people’s savings, including those of the large middle class, worthless. Opening up the markets to imported products at a time when most Russian producers were not competitive destroyed the chances of many industries to restructure and “marketize” themselves. As for privatization, it quickly degenerated into a gigantic scheme to grab and steal what had been built during the previous decades.

Yeltsin insisted on pushing through his ultra-radical policies, whatever the cost to the country. He was, increasingly, in confrontation with large sections of Russian society and in defiance of Russian culture, which rejected such an approach to reform. Violence was, therefore, inherent in Yeltsin’s policies, and it was inevitable that blood would be shed. The shelling of the elected Russian Parliament in October 1993 and the bloodbath in Chechnya will remain an indelible stain on Yeltsin’s record. They have also stained the West, which in effect endorsed those atrocities.

Today, Yeltsin is trying to cling to power. Once again, the West seems ready to throw him a lifeline of moral and political support. Visiting Moscow, Bill Clinton repeated the mantra about the need to stay the course of reforms–the “reforms” that have impoverished millions of Russians and have imposed a second-rate status on Russia in international politics. Many in Russia are wondering if this is indeed what the West wants. Is the hidden agenda behind US policy to weaken Russia and then use its weakness for its own purposes?

Surely it would be much better to let Russia work things out according to its own traditions and possibilities without tying the future of reforms to an authoritarian regime and its leader, as well as to Western dogmas and conditions. Russia has the strength and the resources to overcome this crisis. We must, as part of any new plan, guarantee private deposits in failing Russian banks, a move that would restore trust in the banking system. If creditor countries and international institutions would join with our banks in developing methods of backing such guarantees, that effort would also build trust in the West’s intentions.

But Russia can end the crisis only if the ruling regime is replaced. For now, there is still a chance to make it happen by constitutional means. Today Boris Yeltsin is the main obstacle to ending the crisis. The difficult and painful decisions that are now necessary will be supported by Russian society only if it trusts the authorities. But neither the president nor the Duma has such trust now. Hence the need for early elections of both president and Parliament. The confirmation of Yevgeny Primakov as the new Prime Minister has created favorable conditions for holding them. Primakov is capable of keeping the situation from exploding during the period needed for preparing and holding the elections. The new, credible leadership that will emerge from the elections will certainly have to deal with a terrible legacy. The dangers that we are facing are many, but Russia will not go back to the totalitarian past.

Eventually, it will find its own way–quite different from the road to which it was pushed by the power-hungry politician Boris Yeltsin, and which was supported uncritically by the West.

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