The 'gradualists' who have always argued that shock therapy was unsuited to Russian conditions can claim a degree of vindication. When, on 2 January, President Yeltsin introduced a programme modelled partly on the Polish example, the economy was severely depressed and in a poor state to respond. Unlike Poland, where the private sector was substantial by 1989, almost all the Russian economy was still in state hands. To expect the huge heavy industries, most of them linked to military production and representing powerful political interests, to respond with alacrity to market forces or to accept closures that would put millions out of work, was unrealistic.
Nor did President Yeltsin, although generally popular, enjoy the same depth of patriotic support as the reformers in Poland. Indeed, those who opposed reform largely cornered the market in patriotism by accusing him of presiding over the dismemberment and humiliation of Russia and the betrayal of the 25 million Russians residing in the breakaway republics. They have now gathered a powerful coalition against him, representing large parts of the armed forces and defence-related industries, and bureaucrats with a stake in state ownership.
The shock therapists reply that going slower would have reduced support from the West and given the opposition time to mobilise. They point out that the reforms were going reasonably well until June, when the budget deficit was coming down, inflation was under control and shortages were being reduced. Then, in July, President Yeltsin gave in to political pressures and permitted a massive increase in credits to industry. The result was to derail the reforms and set off a steep rise in inflation.
Arguments about who is to blame are now academic, if only because no one can prove whether the gradualists would have done better. It is clear, however, that shock therapy has proved too much for the Russian system, and is now in deep trouble, even if some aspects, notably privatisation, are still technically on course. While there is virtually no danger of a return to orthodox Communism, various forms of authoritarian government, including the Chinese model, will seem increasingly attractive to a people faced with chaos, hardship and spreading civil war, while anyone who promises to restore Russia's damaged pride will gain a hearing.
The implications for the West are serious. If the former Soviet Union descends into civil war among armies with nuclear weapons, or comes under the control of resentful, insecure, authoritarian nationalists, hopes of fruitful co-operation with the West will vanish, and Nato may have to rearm. To ward off this danger, the West could direct some rapid help towards re-equipping Russia's factories and restoring its ability to export oil and gas, but the problems are larger. They will have to be very high on the agenda of the next President of the United States - if it is not already too late.Reuse content