Yeltsin’s Summit, Russia’s Vale

Yeltsin’s Summit, Russia’s Vale

As he prepares to meet Clinton, Yeltsin leaves behind a Russia in serious disarray–cabinet shuffle and new economic overlord (same as the old) notwithstanding.


President Clinton is meeting March 20 in Helsinki with his Russian counterpart, who is attempting a political comeback by blaming everyone but himself for Russia’s admitted woes, demanding new Cabinet suggestions from his Prime Minister and openly defying public opinion by putting his chief of staff, the hated privatizer and shock therapist Anatoly Chubais, in charge of the country’s economy with the title of First Deputy Prime Minister. Last July Clinton hailed Yeltsin’s election victory as a “triumph of democracy.” He would not dare to echo that boast today, if only because it’s well known that the election was a fraud perpetrated on the Russian public: The Russians would not have voted for Yeltsin had they known he was such an invalid. Only extraordinarily tight government control over television enabled the stage managers to conceal his heart attack. But there is a deeper reason not to insist. The eight months of Russian “regency,” during which the Czar’s exorbitant powers were carried out by proxy, revealed the working of the system, the mechanism through which money first buys power and then fully exercises it.

It being taken for granted that the second reign of Czar Boris will be brief, who will take over, and how? The favorite in the succession stakes, the awesome Gen. Aleksandr Lebed, is eager to start the race at once, while his rivals ponder how to change the rules to prevent his victory. Yet, quite apart from Yeltsin’s precarious health, can the system survive for long? When output slumps for six years in succession in a fall bigger than the Great Depression, when barter replaces monetary exchange and people have to wait three or more months to get their wages, the question is not whether this social caldron will blow up but why it hasn’t exploded yet. Or, to put it in more positive terms: When will the pent-up discontent be transformed into a political movement from below, thus altering altogether the power struggle limited so far to a confrontation at the top among the privileged?

The struggle is so bitter because seizure of power means conquest of property, which, in turn, spells political clout. The installation of Chubais, darling of the international financial establishment, as chief privatizer at the end of 1991 and then economic overlord in 1994 meant favors for the new rich and filthy profits for the chosen few, notably off precious state property, almost given away. The man who presided over this swindle is now presented in the West as a virtuous reformer.

The direct political involvement of the main beneficiaries started at the beginning of last year, appropriately in Davos, Switzerland, mecca of the moneybags. At the time, Yeltsin’s re-election was in trouble. Boris Berezovsky (who, starting with a car dealership, has built an empire that includes banking, oil and television interests) and six of his fellow profiteers (who control four of Russia’s main banks), having grasped that a Yeltsin defeat would threaten their ill-gotten gains, decided to intervene, with Chubais as their man. Removed in mid-January, Chubais was back in six weeks as Yeltsin’s campaign manager. His rich pals brought in their control of the media and, ignoring spending limits, millions of dollars–two of the honorable Chubais’s close assistants were caught smuggling more than half a million in bank notes out of the Kremlin. The combined resources of state and private business produced a campaign whose bias beat all records for a supposedly “democratic” non-totalitarian country. That proved enough to romanticize Yeltsin and demonize the Communist candidate, Gennady Zyuganov; it also generated a smokescreen when the overstrained Yeltsin finally collapsed. In short, those interests did enough to insure the July 3 triumph.

Who pays the piper calls the tune. The financial backers staked an effective claim to gratitude. Chubais became the head of the presidential administration. In the Constitution, bullied through in 1993 after the shelling of Parliament, the Russian president got all the prerogatives of his Western counterparts without the checks and balances. With all other Rasputins removed and Yeltsin only very occasionally able to fulfill his duties, Chubais’s position became crucial, his link to the throne strengthened through an alliance with Yeltsin’s daughter, Tatyana Dyachenko. Hence the description of him as “regent” of the Russian transition. But this was not all. One of his cronies, the banker Vladimir Potanin, was holding the seat of First Deputy Prime Minister in charge of the economy and, the awkward Lebed ushered out, Berezovsb was appointed deputy head of the security council, the other seat of presidential power.

Berezovsky was likely exaggerating when he claimed that he and six other wealthy speculators own half of Russia, especially if one considers the oil magnates outside their circle; the natural-gas lobby, Gazprom (Prime Minister Viktor Chernomyrdin’s power base); the metal lobby; and the all-pervading mafia.

Even so, there is no question that the profiteers are now in positions of power. They may not be barons, but they are certainly robbers. Unlike their nineteenth-century Western predecessors, they don’t build, they grab. They take over state property, make money on the overvalued bonds and, lacking confidence in their country’s future, send profits abroad (the flight of capital in the past five years is estimated by Deputy Prime Minister Anatoly Kulikov at between $150 billion and $300 billion, which puts the I.M.F.5 Russian loan of $10 billion in proper perspective). Altogether the “New Russians,” as the nouveaux riches are called, are still at the stage of feudal accumulation of joys and not the capitalistic joy of accumulation. Their conspicuous consumption, with their B.M.W.s and other forms of luxurious ostentation, can only shock in a country where little glitters outside Moscow and a quarter of the population now lives at bare subsistence level. No wonder Lebed, the self-appointed scourge of the oligarchy, has climbed to the top of the opinion polls.

“A democratic general is as rare as a Jewish reindeer breeder.” The words are Lebed’s and they suggest that the man is more complex than his bluff appearance, his guttural sergeant-major voice and his talent for one-liners (“He who shoots first laughs last”) would imply. One is tempted to endorse his doubts about the democratic predilections of high brass, remembering that during the presidential election he himself wooed voters in the first ballot stage by attacking Yeltsin, knowing full well that he would come to the President’s rescue a few days later. On the other hand, once in office he kept one pledge, showing courage as well as skill in bringing the bloody war in Chechnya to an end. This accomplished, he promised a thorough campaign against corruption, which, in the official company he kept, was a clear invitation to be kicked out.

Still, skepticism lingers about Lebed’s will to fight the oligarchy, no doubt inspired by the elusive nature of his plans in this matter and by the vagueness of his alleged constituency–the mythical middle class. The even stronger reason for suspicion is the one feature he shares with the Yeltsin of the early perestroika era: the sheer thirst for power. We tend to forget that ten years ago Battling Boris was parading as the enemy of privilege and champion of equality. What will Lebed do if he reaches his objective?

This questioning of motives may be superfluous, since there is no guarantee that the rebellious general will be allowed to achieve his ambitions. True, if Yeltsin were to stand down for health reasons and a fair election were held in three months, Lebed would win it. He would defeat Zyuganov and Yuri Luzhkov, the tough Mayor of Moscow, who made pots of money on privatization (albeit without the blessing of Chubais). Of the two other contenders, Chernomyrdin looks too dull and Chubais is too detested. Yet judging by precedent, it is absurd to expect a fair electoral fight. Efforts are already being made to discredit Lebed and keep him out of the limelight. Indeed, one of the reasons for the promotion of his arch-enemy, Anatoly Kulikov from Interior Minister to the rank of Deputy Prime Minister in charge of tax collection, customs supervision and the drive against corruption may well have been to warn the general’s potential supporters that if they put their money on Lebed, they do so at their own peril.

In theory, Lebed’s opponents could go one step further . An agreement between the outgoing President and a majority in Parliament could alter the Constitution so that his successor would be chosen by Parliament and not directly through universal suffrage. For this deal to stand a chance, however, the approval of the Communists, dominant in the Duma, or lower chamber, is indispensable. True, out of dislike and fear of Lebed, Zyuganov and his followers have been driven recently to a rapprochement with Prime Minister Chernomyrdin, whose latest budget they approved after tough negotiations. It is idle, however, to expect them to strike a bargain with Chubais, their most bitter foe. In the circumstances, the most likely prospect is that Lebed will tour his country and seek prestige abroad; that his enemies will fight it out among themselves, prepare plots and keep Yeltsin on the throne as long as they can–as a mummy, if necessary. Meanwhile, the country totters on the brink of chaos. But is it not possible to imagine this stalemate being upset by a whiff of democracy, with the people’s irruption on the political stage?

Why do they not rise? The reasons to rebel are not missing. Economic surveys read like disaster reports. Gross national product, which fell by about’half between 1990 and 1995, dropped by 6 percent last year. Industrial production, which had slid even more during the 1990-95 period, went down by another 9 percent. The collapse of investment and light industry is even more dramatic. True, these figures must be taken with a grain of salt, since a parallel economy is gaining ground. Barter, debt-swapping and hidden financial transactions are replacing normal exchange. Fiscal fraud has reached epidemic proportions. Companies don’t pay taxes, either because they cannot afford to or because they speculate, “lending” money to the state by buying bonds. With its coffers empty, the state is slashing social services and delays payments. The elderly and disabled have to wait for pensions, public servants for their salaries. Industrial workers, whether in the private or public sector, fare no better. They get their wages after long delays and are often paid in kind, having to perform the task of salesperson as a second occupation. This trend reached its tragicomic climax when soldiers offered hand grenades as payment for goods instead of money. (No wonder the Defense Minister publicly proclaimed that he is head of “a disintegrating army and a dying navy.”)

The other drawback is more pedestrian. Just making ends meet is exhausting, and often involves travel to Polish or Turkish bazaars in search of cheap merchandise to peddle back home. With such handicaps, time is needed for a class to rise above its immediate preoccupations, for the workers to present their own demands as.part of a broader program likely to win the support of other sections of society. Indeed, a race against the clock is on in Russia. Will the political education of these potential shapers of a genuinely democratic society have a chance to ripen before discontent reaches explosive proportions and brings about a bloody dictatorship, a threat aggravated by Chubais’s oversight of the economy? This is the puzzling and dangerous Russia that Boris Yeltsin is leaving behind as he crosses the Finnish frontier.

President Clinton, too, is coming to Helsinki with a new posture. He can no longer stick to his pal Boris at any cost. He must now look beyond Yeltsin, as everybody does, including the latter’s supporters in Moscow. This new journey to the Finland station and the inauguration of a new policy thus marks an appropriate moment to assess the old one, based on unquestioned support of Yeltsin and his record in office.

That record is appalling. He and his shock therapists nearly killed the patient, destroying the old methods and instruments of production without replacing them with new ones. Russia is fast becoming a Third World country relying almost exclusively on the export of raw materials. The gap between rich and poor, which always existed, has widened dramatically. Russia is rapidly moving toward a system of two-tier health, housing and education. Crime is spreading like poison through the social body. A measure of the social degeneration is that you can hardly distinguish where legitimate business ends and the reign of the mafia begins. The physical degeneration is shockingly illustrated by the unprecedented six-year drop in life expectancy.

This decay has occurred under the auspices of the international financial establishment, under the supervision of the International Monetary Fund and with the full backing of Western governments. Whatever Boris did to cling to power–storming Parliament, invading Chechnya–the West was always there to say Amen. And all this on the probably wrong assumption that Yeltsin was the best bet for keeping Russia safe for profit. Those who have cherished the illusion that Western foreign policy is somehow connected with moral principles and the rights of man no longer have any excuses. The last years and months have taught us a lot about Russia’s democracy and ours.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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