The Penguin History of Modern Russia

It is easy to see why Yeltsin selected the second option. Imperious and impulsive, he had an aversion to Gorbachev’s procrastinations; he must also have sensed that the political, economic and national elites at the centre and in the localities might retain a capacity to distort the results of any election he might at that stage have ordained. To Yeltsin, economic reform by presidential decree appeared the surer way to bring about the basic reform he required in the Russian economy. The choice between the two options was not a straightforward one; but Yeltsin’s decision to avoid the ballot-box probably caused more problems for him than it solved. It inclined him to use peremptory methods of governance which previously he had castigated. It also compelled him to operate alongside a Russian Supreme Soviet which had been elected in 1990 and whose majority was constituted by persons who had little sympathy with his project to create a full market economy.

Yeltsin and Gaidar made things worse for themselves by refusing to explain in any detail how they would fulfil their purposes. They reasoned among themselves that citizens were fed up with the publication of economic programmes. Yet Gaidar’s reticence induced widespread suspicion of the government. As prices rose by 245 per cent in January 1992,¹ suspicion gave way to fear. Russians worried that Gaidar’s ‘shock therapy’ would lead to mass impoverishment. Moreover, they had been brought up to be proud of the USSR’s material and social achievements and its status as a superpower. They were disorientated and humbled by the USSR’s disintegration. Russians had suddenly ceased to be Soviet citizens, becoming citizens of whatever new state they lived in; and their bafflement was such that when they spoke about their country it was seldom clear whether they were referring to Russia or the entire former Soviet Union.

Gaidar appeared on television to offer reassurance to everyone; but his lecturely style and abstract jargon did not go down well. Nor did viewers forget that earlier in his career he had been an assistant editor of the Marxist-Leninist journal Kommunist. Gaidar had never experienced material want; on the contrary, he had belonged to the Soviet central nomenklatura. Even his age — he was only thirty-five years old — was counted against him: it was thought that he knew too little about life.

Yeltsin knew of Gaidar’s unappealing image, and endeavoured to show that the government truly understood the popular unease. Aided by his speech-writer Lyudmila Pikhoya, he used words with discrimination. He ceased to refer to the Russian Soviet Federal Socialist Republic as such; instead he usually called it the Russian Federation or simply Russia. At the same time he strove to encourage inter-ethnic harmony. He addressed his fellow citizens not as russkie (ethnic Russians) but as rossiyane, which referred to the entire population of the Russian Federation regardless of nationality.² While denouncing the destructiveness of seven decades of ‘communist experiment’, he did not criticize Lenin, Marxism-Leninism or the USSR by name in the year after the abortive August coup. Evidently Yeltsin wanted to avoid offending the many citizens of the Russian Federation who were not convinced that everything that had happened since 1991, or even since 1985, had been for the better.

The Russian President eschewed the word ‘capitalism’ and spoke in favour of a ‘market economy’.³ It would also have been impolitic for Yeltsin to recognize that the USA and her allies had won a victory over Russia: he refrained from mentioning ‘the West’ as such; his emphasis fell not on the East-West relationship but on Russia’s new opportunities to join ‘the civilized world’.⁴

Yeltsin towered above his team of ministers in experience. This was inevitable. The most illustrious ex- dissenters were unavailable. Sakharov was dead. Solzhenitsyn insisted on finishing his sequence of novels on the Russian revolutionary period before he would return home. Roy Medvedev’s reputation had been ruined by his role as adviser to Lukyanov, a collaborator of the putschists. In any case, the veteran dissenters — including the less prominent ones — adapted poorly to open politics: their personalities were more suited to criticizing institutions than to creating them. Yeltsin retained some of Gorbachev’s more radical supporters. After the August coup, with Yeltsin’s encouragement, Gorbachev had brought back Shevardnadze as Soviet Foreign Minister and Bakatin as chairman of the KGB, and these two stayed on with Yeltsin for a while. But Shevardnadze went off to Georgia in 1992 to become its President, and Bakatin resigned after the dissolution of the USSR.⁵

Necessarily the team around Yeltsin and Gaidar consisted of obscure adherents: Gennadi Burbulis, Anatoli Chubais, Andrei Kozyrev, Oleg Lobov, Alexander Shokhin, Sergei Shakhrai and Yuri Skokov. Most of them were in their thirties and forties, and few expected to hold power for long. Only Vice-President Rutskoi and the Speaker in the Russian Supreme Soviet Khasbulatov had previously held influential posts. Rutskoi was contemptuous of the youthful ministers, calling them ‘young boys in pink shorts and yellow boots’.⁶

But the young boys shared Yeltsin’s enthusiasm to effect change. The fact that they assumed that their tenure of office was temporary made them determined to make a brisk, ineradicable impact. What they lacked in experience they made up for in zeal. Yeltsin was raring to give them their opportunity. Where Gorbachev had feared to tread, Yeltsin would boldly go. Having seized the reins of Great Russia’s coach and horses, he resolved to drive headlong along a bumpy path. Yeltsin saw himself as the twentieth-century Peter the Great, tsar and reformer.⁷ Those who knew their eighteenth-century history trembled at the comparison. Peter the Great had pummelled his country into the ground in consequence of his dream to turn Russia into a European power and society. Would Yeltsin do the same in pursuit of an economic transformation approved by the International Monetary Fund?

Yeltsin and his cabinet knew that the old communist order had not entirely disappeared with the USSR’s abolition. The Communist Party of the Soviet Union had vanished; Marxism-Leninism and the October Revolution were discredited. But much else survived from the Soviet period. The Russian Supreme Soviet contained a large rump which hated Yeltsin. The local political and economic elites, too, operated autonomously of Moscow; they worked with criminal gangs to promote their common interests as the market economy began to be installed. In the internal non-Russian republics of the RSFSR the leaderships talked up nationalist themes and gained local support.

The methods of communism were used by Yeltsin to eradicate traces of the communist epoch. He rarely bothered with the sanction of the Supreme Soviet, and he visited it even more rarely. He confined deliberations on policy to a small circle of associates. These included not only Gaidar and his bright fellow ministers but also his bodyguard chief Alexander Korzhakov (who was his favourite drinking mate after a day’s work). He sacked personnel whenever and wherever his policies were not being obeyed. In provinces where his enemies still ruled he introduced his own appointees to bring localities over to his side. He called them variously his ‘plenipotentiaries’, ‘representatives’, ‘prefects’ and — eventually — ‘governors’. These appointees were empowered to enforce his will in their respective provinces. In the guise of a President, Yeltsin was ruling like a General Secretary — and indeed with less deference to ‘collective leadership’!⁸

To his relief, price liberalization did not lead to riots on the streets. The cost of living rose; but initially most people had sufficient savings to cope: years of not being able to buy things in Soviet shops meant that personal savings kept in banks were still large. Although Yeltsin’s popularity had peaked in October 1991,⁹ there was no serious rival to him for leadership of the country. He intended to make full use of his large latitude for the strategic reorientation of the economy. Nor did the industrial and agricultural directors object strongly to his proposals. For they quickly perceived that the liberalization of prices would give them a wonderful chance to increase enterprise profits and, more importantly, their personal incomes. Politicians from the Soviet nomenklatura, furthermore, had long been positioning themselves to take advantage of the business opportunities that were becoming available.¹⁰

Confidently Yeltsin and Gaidar proceeded to further stages of economic reform. The two most urgent, in their estimation, were the privatization of enterprises and the stabilization of the currency. The first of these was to be privatization. Its overseer was to be Anatoli Chubais, who was Chairman of the State Committee for the Management of State Property. His essential task was to put himself out of a job by transferring state enterprises to the private sector.

Chubais published projects on the need to turn factories, mines and kolkhozes into independent companies, and seemed to be about to facilitate the development of ‘popular capitalism’. But the crucial question remained: who was to own the companies? In June 1992, Chubais introduced a system of ‘vouchers’, which would be available to the value of 10,000 roubles per citizen and which could be invested in the new companies at the time of their creation. He also enabled those employed by any particular company, whether they were workers or managers, to buy up to twenty-five per cent of the shares put on the market; and further privileges would be granted to them if they should wish to take a majority stake in the company. But Chubais’s success was limited. At a time of rapid inflation, 10,000 roubles was a minuscule grant to individual citizens; and the facilitation of internal enterprise buy- outs virtually guaranteed that managers could assume complete authority over their companies; for very few