Russia 1991-2001

The collapse of the Soviet Union 1991

• In August 1991 all the political and military leaders who were strongly opposed to G attempted to stage a coup against him. They were concerned about the developments in EE and other aspects of Gorbachev's foreign policy, they were worried that the draft Union Treaty would shift power to the republics and lead to the eventual break-up of the USSR and the end of the Soviet socialist system. They were also opposed to Yeltsin's increasing adoption of policies leading to a transition to a complete market economy.
• 18 August: Gosbachev was placed under house arrest by a small group of conservative hardliners, called 'State Emergency Committee'. Gosbachev refused to resign so the plotters declared a state of emergency and cancelled the Union Treaty
• This became public and there were protests and demonstrations
• Yeltsin placed himself at the head of the protestors in Moscow
• The plotters began to waver
• The bulk of the army and security forces decided not to back the coup so on 21 August , the plotters gave up and fled
• When G returned to Moscow Yeltsin took equal control over the government
• 24 August: G resigned as general-secretary of the CPSU - but remained president
• Yeltsin then began moves to establish the power of Russia
• Many republican leaders began to fear that he intended to take over all Soviet assets, making Russia the dominant power
• It forced many nationalists to see breaking away from the USSR as the only way to protect their power
• December 1991: Ukraine voted to leave the Union. Then Russia, Belorussia and Ukraine formed the Commonwealth of Independent States (CIS)
• December 25: G announced his resignation as president of the USSR - formal end of USSR
• Why did Gorbachev fail?
• Historians continue to debate the causes of the collapse of the USSR and why G failed.
• Some argue that the deep-seated and long-standing economic and political weaknesses within USSR made successful reforms highly unlikely
• Catherine Merridale: G's ultimate failure was mainly due to his refusal to give his whole-hearted backing to reform-minded people, and to his lack of a coherent reform programme
• David Marples and Archie Brown: G was a genuine - if somewhat cautious - reformer. >< disputed by Robert Service and Dmitri Volkogonov
• What happened in Russia between 1992-2000?
• After the break-up of the USSR in December 1991, Yeltsin remained president of the new state of Russia (the Russian Federation) until 1999
• Russia 1992-1996
• Advices from US and Western financial institutions to transform Russia's economy into a neo-liberal 'free-market' capitalist economy.
• Aimed to be achieved by abolishing subsides and price controls, and implementing a rapid and massive programme of privatising state industries
• This was largely overseen by Jeffrey Sachs who had been responsible for a similar 'shock therapy' in Bolivia and Poland -> he had given advices since before the collapse of USSR
• Result: the rapid emergence of several billionaire Russian 'oligarchs'. The privatisation schemes put most of the nation's wealth into their pockets - while 140 mio fell below the poverty line in Russia
• Economic policies and the 'Chicago School'
• Economic experience inspired by Friedrich Hayek and Milton Friedman (Uni of Chicago) -- they had advocated economic policies that encouraged 'free-market'/unrestrained capitalism
• First applied in the military dictatorships of Chile and Argentina in the 1970s. Then in Reagan and Thatcher's US and UK in the 1980s
• The British journal 'the Lancet' by J.K. Galbraith the results were 'all shock, no therapy'
• In Russia the increase was 12.8% in the male death rate in 2 years (due to unemployment and drinking) - by mid 1990s the male life expectancy was 59
• G's advisors 'the Chicago Boys' were divided over the speed the economic reforms should be implemented
• Gaidar and Chubais (Yeltsin's Deputy and deputy for economic policy) argued for rapid implementation - against new elections
• Before the end of 1991: Yeltsin had agreed to take the direction insisted on by the US Treasury Department, the international Monetary Fund and the World Bank
• They were pushing for 'shock therapy' because of the situation in EE
• Needed a rapid transition to capitalism before people would oppose too much
• Less than a week after the USSR collapse, Yeltsin began a full-blooded economic 'shock therapy' programme
• 2 Jan 1992: Gaiar introduced more policies recommended by Sachs
• Rapid rising unemployment
• Price controls removed, and harsh austerity measures were taken to cut welfare spending - when people needed it
• Deep economic depression and reduced living standards
• Prices rose by 245% in Jan 1992 - and wages were often not paid
• Tens of mio's were plunged into poverty --> beggars and homeless people came to the streets
• According to some economists, Russia suffered an economic downturn that were more severe than US and Germany under the Great Depression
• 1992: 18% lower production + 9% lower food production from 1991
• Many Russian politicians began to attack Yeltsin
• Feb 1992: Russia's vice-president Rutskoi accused Yeltsin of presiding over 'economic genocide'
• But he continued and in 1993 Russia's GDP fell by 12% compared to 1992. By 1994 inflation was still in three figures, industrial output continued to decline, and free health was a memory
• Political developments
• 1992: Khasbulatov (speaker of Supreme Soviet) became an increasingly vocal critic of Yeltsin
• Opposed to the pace of the economic reforms and that he ignored the parliament
• Yeltsin >< the Supreme Soviet of Russia and the Congress of People's Deputies on the other
• 20 March 1993: continued disputes led Yeltsin to say he would declare a state of emergency to give him 'special powers' to push through his economic policies
• 26 March: the Congress of People's Deputies tried to dismiss him as president but failed
• During the summer a dual power Yeltsin >< Supreme Soviet
• 21 September 1993: 'the Pinochet option': Yeltsin announced his intention to disband the Supreme Soviet and the Congress of People's Deputies
• Planned to rule by decree until the elections
• The next day, the Supreme Soviet voted 636-2 to dismiss Yeltsin as he'd broken the constitution - Rutskoi acted as president
• Yeltsin's economic policies resulted in mass popular unrest
• Tens of thousands of anti-Yeltsin demonstrators marched in Moscow in what seemed to repeat EE 1988-89
• Yeltsin got the support of Russia's military to use force to overcome his opponents
• 4 October: Yeltsin ordered the army to shell the building. Over 500 members of parliament and their supporters were killed, and more than 1000 people were injured. Rutskoi and Khasbulatov were arrested. Yeltsin banned opposition and censored the media - and accelerated economic policies
• December 1993: new elections were held. This was to be the Federal Assembly made up of a State Duma and a Council of the Federation.
• Yeltsin's supporters were outnumbered by the huge number of anti-Yeltsin candidates elected
• Yeltsin then drew up a new constitution that gave the president more power
• Yeltsin had to slow down the pace of privatisation, and in Jan 1994 Gaidar resigned from the government
• 1995: Russia's growing foreign debt was causing even greater economic problems. According to the World bank 7.4 mio Russians were now below the poverty lie
• Yeltsin needed support from Russia's business elite if he was going to be re-elected in 1996
• He planned a wave of privatisation of Russia's most valuable state enterprises, given the businessmen shares in return for 'loans'
• Effect: Yeltsin sold off valuable public assets at unrealistically low values. By mid 1996 these men owned most of Russia's major firms
• Feb 1996: Yeltsin announced his intentions to seek re-election. The communist party was attracting support from those who now looked back fondly to a time when the Soviet state had provided security, employment and social welfare
• Yeltsin's opinion poll ratings were so low that his advisors advised him to cancel the election and rule as a dictator
• Service: Yeltsin had shown that his commitment to democracy was, at best, less than solid
• Chubais (main advisor) became his campaign manager. He used privatisation measures to gain the support of important financial and media oligarchs to finance Yeltsin
• In return he enabled these oligarchs to acquire majority stakes in some of Russia's most valuable state-owned assets
• He warned if Zyuganov (communist) would take Russia back to totalitarianism
• My TV stations ran shows on Stalin's crimes and claimed Zyuganov was a modern Stalin
• Yeltsin also promised to drop some of the unpopular economic reforms
• His chances of winning were increased by the IMF's timely announcement that they intended to grant Russia a US$10 bio loan (if they carried out total privatisation of state enterprises)
• July: Yeltsin won 54% of the vote >< Zyuganov 41%
• Russia 1996-2000
• After 1996 allegations of corruption increased
• Although Russia had received US$40 bio from IMF and other international organisations since 1991 the most had been stolen by Yeltsin's friends and backers
• Economic problems continued and the living standards remained low
• 1996: 20% of the population was still below the UN poverty line
• 1998: Yeltsin's government defaulted on its debts --> collapse of the rouble --> serious political and economic crisis
• May 1999: Yeltsin's opponents in the State Duma tried to remove him by vote - failed
• August: Yeltsin fired his prime minister who was replaced by Putin
• 31 December 1999: Yeltsin announced his resignation and Putin became the acting president (vote in March 2000)
• 1/3 of the population was living below the poverty line of US$38 per month
• More than 80% has gone bankrupt and over 6000 factories had been closed down