Stalinism or capitalism, it's the poor who always pay

Two weeks ago, I was looking up at Joe Stalin's statue at Gori, his birthplace in Georgia. He looked fine: full of fatherly confidence, ready for another day of signing death warrants and deporting minorities.

Nobody had even scrawled graffiti on his plinth. But you have to say something. I said: "You bastard! What about Katyn? What about the kulaks and the Tatars and the Chechens and Osip Mandelstam and Trotsky?"

"I feel good about all that," replied Stalin. "I can see the mountains from up here, and I forgive all my enemies for their errors. I'm not allowed cigarettes, being a statue, but apart from that I have no complaints."

"You bastard!" I repeated. "You sacrificed the happiness of a whole generation and told them their children would inherit a bright new world."

"Odd you should say that," the Marshal returned. "Haven't you noticed that the International Monetary Fund and the bankers are saying just the same thing - put up with a few decades of unemployment, hunger and poverty and then golden capitalist wealth will trickle down to you?"

Furious, I turned to march away. Stalin called after me: "I admit I was pretty rough with my fellow Georgians. I shot all the intellectuals - but at least I never insulted their intelligence..."

Stalin brought the Caucasus into the Soviet Union, with a brutality that shocked even Lenin. But travelling there now, six years after the fall of the Soviet empire, is the most haunting of post-imperial tours. Fifty years after the departure of the legions, the old Britannia province must have been like this.

The Roman roads did not decay as fast as the great Soviet highways. The main road connecting Armenia to Georgia, across the passes of the Lesser Caucasus range, has reverted to a pot-holed cart-track over which a Land Rover pitches and sways in its lowest gears. At the approach of each city the road passes between the silent hulks of abandoned factories; already some local people cannot remember what it was that they made. Inside these factories, the machinery halls have been looted for everything that could possibly be sold, burnt for fuel or hammered into a shanty roof. Refugee families squat in the administration offices. The lawns of the old Kombinat now grow vegetables, and pigs rootle among wrecked tanks left by a half-forgotten civil war.

And here and there you can find the remains of imperial inscriptions. In the faded Cyrillic script of the empire, in the Russian language which has vanished from the streets, they say: "We Love Our Profession" or "Soviet Power Plus Electrification Equals Communism". The broken tablets might as well say: "Londinium's Gratitude to the God and Emperor Hadrian". Stalin's empire is already archaeology.

The misery of the Caucasus republics has two sources. One is the fall of the Soviet Union, and the local wars which burdened the Caucasus with 1.5 million refugees. The great Soviet market around which the Caucasian economies had been built vanished. Armenia had specialised in computers. Georgia had prospered by exporting fruit, tea and wine to Russia, and by the tourist revenue from the Abkhazian coast. Then the continental planned economy disintegrated. Most of the road and rail links to Russia were blocked; trade with Russia dried up. Georgia suffered worst. Industrial production fell to a tenth of its output in Soviet times, and by 1994 inflation had reached the spectral level of 10,000 per cent per annum.

But on the heels of the collapse came the Reform - the transition towards the free market economy, under Western "guidance". Sometimes it is hard to tell the damage inflicted by the second from that caused by the first.

We now have seven years' experience of "privatising" Communist economies. Have we learnt anything? Some changes, certainly, have to be done fast and cannot be done without pain, like killing off inflation by letting the currency plunge to find its real international value. Imposing basic market discipline hurts, too. The old scarcity economy, in which people have wads of banknotes but the shops are empty, has to be reversed; the shops become well stocked with goods, while the commodity that is scarce is money to buy them with.

But there are avoidable pains, too. In Tbilisi, capital of Georgia, brightly lit but empty supermarkets are crammed with German or Dutch groceries at German or Dutch prices, while the average income is only about pounds 5 a month. It cannot be true that the only way to build a market economy is to destroy living standards for all but a wealthy few, and to pitch the majority of a nation into helpless, humiliating poverty. It cannot be right - as the IMF seems to think - to achieve balanced budgets by cutting off all state-subsidised welfare.

The health services in Georgia are an awful example. In one town, I found that only patients who turned up with their own drugs and bandages were being treated; the poor, however ill, were simply turned away. A woman who did get into a maternity ward found that the nurses charged her for a drink of water, even for watching the baby and keeping the rats away while the mother slept. Their income was so low that they could not possibly live on it. Others simply stole hospital equipment and ran illegal clinics from home.

In Armenia, IMF pressure on the government budget induced the state electricity authority to impose a "market price" for power and then cut off tens of thousands of families who could not afford it. To get reconnected, they have to pay three months' income for a new meter. And all over the region, there is almost no winter heating. The old Soviet system was "district heating": small local power stations pumped hot water through the radiators of thousands of offices and apartments for a nominal charge. This has been abolished. One day, maybe, those who can afford them will have personal furnaces. Meanwhile, with only a few hours of electricity a day, families wear many jerseys in winter and chop down trees in the park for fuel.

They say that the Georgian economy is "picking up". So it is, in economists' terms. There is modest growth this year, and a first vanguard of foreign investors has arrived in Tbilisi with high hopes. One day soon, somebody will be making lots of money in Georgia, the budget will balance and the international bankers will talk about "success".

Privatisation will go further. The land has already been parcelled out among small farmers - in contrast to Russia. But now state industry and bureaucracy will be cast adrift. The government employs 800,000 people in Georgia, 15 per cent of the entire population. Most are so badly paid that they sell their services illegally to the public. Now most of them will lose even that chance of a living.

In Communist times, life in the Caucasus republics was the best in the Soviet Union. Prosperity may come again, and it may even be general, but too late for those millions whose lives have been wrecked by the way this great change was driven through.

It could have been done differently, more gradually, in a way that preserved human dignity through inevitably hard times. But it is being done like a rape. In Stalin's time, the Five Year Plans shovelled a living generation into the furnace in order to smelt a heavenly future for their children. That future never arrived - and this one? From Gori, I hear a sarcastic laugh.