Forget reforms in Russia now, they'll never happen

The moment the elite see elections are going to threaten them, they will move to end democracy
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The Independent Culture
THE NOMINATION of Yevgeny Primakov as Russian prime minister marks another stage in the progress of the Yeltsin era towards its end. As a sort of political lowest common denominator, on whom most parties can agree, he will - if confirmed - probably be able to hold the political situation together for a while, and avoid an immediate constitutional clash between President and parliament.

The only man who is willing or able to become prime minister at such a time is thus a 69-year-old foreign policy expert and intelligence official with no political base, no electoral experience and absolutely no economic background. This is a confession by Yeltsin of complete political and economic bankruptcy. With shelves empty, people hoarding food, and regional governors (illegally) declaring local states of emergency and refusing publicly to pay taxes to the centre, we are right back to the position which prevailed at the very start of the Yeltsin era, in late 1991 and early 1992.

What this means, and what the West must recognise, is that Yeltsin's entire record in government has been a catastrophic failure. His presidency must end, and end soon, with all its works, and all its empty promises. While some other former Communist countries have progressed tremendously over the past decade, Russia has to begin again from the very beginning. Forget the "bad luck " of the Asian economic crisis. Poland and other states have used the past years to build healthy economic and political systems which should be able to withstand a world economic downturn. Russia's rulers under Yeltsin have undermined its health to the point where it was bound to succumb to any serious new global financial infection.

Talk by Western governments of the need for Russia to "return to the path of reform", and that Western aid will be dependent on this, were mistaken in the past and are now entirely ludicrous.

What happened under Yeltsin was never "reform" in the sense that this was carried out in central Europe and advocated in Russia by well-meaning but hopelessly naive Western economists. Rather it was a process whereby sections of the old Communist elites, together with new elements from the black market and criminal worlds, seized upon and plundered the state economy and indeed the state itself. In the process, they diverted the proceeds of Russia's only real economic asset of immediate value - exports of oil, gas and minerals - into their own pockets and from there into foreign bank accounts, foreign real estate, and conspicuous consumption.

This is what Russia's "privatisation process", so much praised in the West, really consisted of. On top of all this, the state has again and again presided over the destruction of ordinary people's savings, in part as a deliberately cynical move to help it pay off its own debts in devalued money, and in the process, to help save the oligarchs and their banks.

Under Yeltsin, Russia became ruled by a Latin-American style "comprador" elite of the worst type. These men were willing to preserve the facade of democratic institutions so long as these did not threaten their power and profits. But make no mistake about it, the moment they see that elections are going to threaten them, they will move to subvert or end democracy. The West must be very careful that a fear of "communism" or "fascism" in Russia does not lead it to go on supporting Yeltsin and his oligarch backers to the point where they start shooting people to stay in power.

In any case, much of the point of economic reform has been irrevocably lost. This was, or rather should have been, to stimulate foreign direct investment in Russia, above all through the sale of profitable Russian industries to Western companies. Even more important than the revenue this would have brought in would have been the management skills and contribution to the creation of a civilised economy. But seven years of possibilities were lost as a result of a malign de facto alliance between communists, nationalists, and oligarchs afraid of competition.

For the foreseeable future, any Russian government, of any colour, will be engaged not in an ideological economic programme but in desperate measures of crisis management. None of the possible policies, by any party, will be able to prevent hyperinflation, because printing money is the only way the state will be able even to pretend to pay its bills. Certainly the idea of a central government as weak as Primakov's will be sticking to the austerity of a currency board is simply madness.

Russia will therefore suffer a terrible economic crisis whatever happens. To prevent this leading to the actual disintegration of the Russian state, together with the rise of extremist movements and the growth of political violence, the only hope is for Yeltsin to be replaced by a new president enjoying fresh legitimacy, elected by a more or less free and fair process. Only such a president would have the ability - would indeed have the moral right - to call on the population to accept further suffering.

Let us be frank, however, about what this means. It is now generally recognised in the West that the oligarchs as a group are a key part of Russia's inability to establish a working free market. To break these men's power means renationalising - at least for several years, until they could be sold again for their true worth - the industries which they stole from the Russian state and people. That would be an unpalatable process for many in the West, and it might also involve violence. But it has to be done if the Russian state and economy are ever to have any chance of developing in a modern and civilised direction.

The author's `Chechnya: Tombstone of Russian Power' is published by Yale University Press