Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

Dawn (Pakistan)
October 11, 2001
Putin and Russian capitalism
By Anwer Mooraj

The destruction ten years ago of the Soviet Union, that socialist monolith which stretched across 11 time zones, was possibly the greatest disaster that befell the people of the Third World. Not only did it rob the nations of Africa, Asia and South America of the opportunity of playing off one superpower against the other, it triggered a chain reaction which resulted in, among other things, the disintegration of the former state of Yugoslavia.

On Christmas Day in 1991, when the 74-year old USSR disbanded and 15 former Soviet republics spun off on independent trajectories, Russia had completely lost its moorings. And one was reminded of Winston Churchill's famous quip about Russia - 'a riddle wrapped in a mystery inside an enigma.' The effects of the cataclysm are still being felt in sputterings of civil war from Chechnya to Central Asia and in diplomatic corridors everywhere.

The communist parties of Italy, France, India and Cuba still look back nostalgically to the days when the hammer and sickle fluttered loftily in the wind. But interestingly enough, there is evidence to suggest that similar sentiments are now being expressed inside Russia, not just among members of the Communist Party, but also other groups with different political alignments. In fact, a poll conducted earlier this year by the Public Opinion Foundation, pointed out that 79 per cent of Russians now regret the demise of the Soviet Union - up from 9 per cent in 1992. Many Russians long for the simple certainties of the Soviet period when nobody went hungry, when everybody had enough clothes, and living conditions for most citizens were about the same.

The Soviet Union claimed not only to be a military giant, but also an industrial colossus. It nurtured an economy which, for all its clumsiness, still produced twice as much oil, steel, cement, aluminium and rubber than the United States. Many of the products were, of course, substandard and were funnelled through the central planning system. However, it wasn't production, but distribution, which was the main economic problem. On a trip to Prague in 1980 I remember reading with considerable amusement, how two million bicycle produced in Hungary and destined for East Germany, landed up in Bulgaria!

After Yeltsin took lover from Gorbachev, things started to go horribly wrong in a country which once vied with the United States for world supremacy, and which has now become a panoply of raw thrusting consumerism and newfound wealth jostling with age-old images of ingrained poverty. the jarring mosaic of Russian society consists of a thin layer of very rich people, a thick chunk of very poor and a small, vulnerable middle class whose future is quite uncertain. Life in Russia during the last eight years has, in fact, witnessed a series of spiralling economic and social disasters. In late November 1998, one read in European newspapers about the new swanky Russian millionaires in their luxurious German cars, accompanied by brigades of bodyguards, drive past the very spot where 16 Moscow citizens froze to death.

Observers have pointed out that during Yeltsin's reign, few people paid taxes. Corruption was rampant. Western investment was shy. Teachers, doctors and soldiers went unpaid. AIDS, drug abuse and pornography spread like wild fire. Yakuza-type criminal gangs were everywhere, and to top it all, nuclear submarines were shut down because the defence ministry couldn't pay its bills! It was inevitable that the exchequer would run out of money, and it had become fairly obvious that the Russian state was living on borrowed time.

The people's misery was further compounded in August 1998, when the rouble was devalued. Thousands lost their money, banks and other financial institutions folded and Russia's credit rating sank to its lowest depth. It's the very opposite of the egalitarian society that communism set out to build, and a very long way from the prosperous democracy Russia yearns to be. Devaluation spurred internal production, especially food. But this was insufficient to meet the demand.

This is the scenario that the 48-year old President Vladimir Putin inherited when he took over the nuclear suitcase from President Boris Yeltsin on December 31, 1999. A man who relishes difficult choices, most observers see him as a benevolent force that will push on with privatization while trying to clean up the system. The fact that he took on reformers like Yeltsin's economic guru Anatoly Chubais was seen as a good sign. Chubais had, of course, fallen out of favour when former communist apparatchiks made off with the best assets. But his insistence on privatization has led the way to reforms.

Putin made his intentions quite clear when he said that Russia's economy would have to grow at a rate of eight per cent a year over the next 15 years, to catch up with the economies of Spain or Portugal! At 190 billion dollars, Russia's GDP is only a fifth the size of China's and one-fiftieth that of the United States. Putin, nevertheless, has four factors working in his favour. The first is the stabilization of the economy. The second is a worldwide boom in the price of crude oil, one of Russia's main exports. The third is the gradual re-emergence of investor confidence in the country after the mass exodus of portfolio capital in the summer of 1998. And the fourth is the fact that Russians, in spite of their physical and intellectual privations, are still better educated and more cultured than the populations of almost all European countries. Moscow University has always had the highest academic standards and in many disciplines is ahead of the Sorbonne.

There is a nagging bloated balance of payments debt of over three billion dollars. But the impression that is being circulated is that ever since Putin made a resolve to free prices, establish markets, get banks operating and kept his finger on the reform button, things are likely to turn out all right in the end.

In recent months western financial journals which support the switch-over to a market economy, are constantly on the look-out for success stories, and have been identifying people like Victor Ishayev, governor of Khabarovsk and Igor V. Makarov, president of Itera, who have achieved a measure of success in their respective fields. But these stars in the new Russia are isolated luminaries.

Western political analysts, while they welcome these experiments in market reform, haven't really altered their perceptions of the great Bear and still harbour strong views on Russian nationalism. The hardliners among the scholars see nationalism as a malevolent force and follow a tradition or belief in an unchanging national culture which has persisted from the days of tsarism to the Soviet and post-Soviet periods. This essentialist reasoning is what has led westerners during the Soviet period to declare that communism was "little more than the new face of eternal Russia." In the post-Soviet era the viewpoint that Russian culture is unchanging, persists, and has bred an ethnic, collectivist and authoritarian nationalism that is infused with anti-westernism, exaggerated claims of uniqueness and an apocalyptic sense of mission.

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