The Soviet Union: Political Rights, Civil Liberties & Democracy

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Part one: Focusing only on the pre-Putin period (pre-1999), please explain key causes for this largely unexpected reversal of political change in Russia.

Yeltsin was a free market radical, so to speak. He wanted a sudden change in Russian economics, from a state controlled economy to a market one. He had the assistance of the EC, the US and many private firms to assist him in this. At the time, Yeltsin was, too, seen as "authoritarian" though now, he is a "national democrat." Much of what Putin was later to do, Yeltsin had pioneered, with western support. Hence, the attacks on Putin these days are curious.

In order to make this transition as quickly as possible, Yeltsin hastily, with US help, created auctions where assets for formerly Soviet industries were sold off piece by piece. Here is the issue: there was as yet no legal structure in place to make this work. It was near anarchy, since the only law in force was the old Soviet one, little of it enforceable (Kotz, 1998 and Hoffman, 2011).

One of the architects of this was Yegor Gaidar. He quickly became one of the most unpopular men in Russia. The three others weer Boris Nemtsov, Anatoly Chubais and Grigory Yavlinsky. Ultimately, not only the economy, but the stat itself, collapsed. This is the only way to understand Putin, his policies and his popularity.

Foreign Affairs, always pro-Yeltsin, reports the following statistics: 40% collapse in GDP from 1991-1999. Almost half the economy "disappeared." In reality, it want into the hands of a few oligarchs, and much of it in foreign bank accounts. These men then took over Russia, running it largely as a feudal kingdom: weak central authority and powerful regions. They created their own political parties, trained their own armed forces and controlled the press. Russians went deep into poverty.

Once this became plain, the architects of the plan backed off, blaming everyone else for the issues. He writes in Foreign Affairs that the "Russian people" must vote for "democracy" in the 2000 elections. At the time, his own popularity was running about 2-3%. Hence, he did not mean "democracy" in the normal sense of the word.

The real change was between 1994-1996. Here, the oligarchs were openly ruling with Yeltsin, who was often drunk and would disappear for weeks on end. It didn't matter. The oligarchs bought up most of the banks, then issued licences to trade internationally that only they could have. As the government got desperate, the oligarchs stepped in and loaned Moscow the money to continue to function. Russian was not a "government" in any sense of the word. About 700 major families controlled almost the entire Russian economy and hence, the state as well.

Government revenues went down by over 50% in this same time. Wages went down by about 75% by 1998. In 1992, the inflation rate was almost 1000%. Light industry, that is, the consumer sector, lost about 90% of its capital, the hardest hit sector of all. Machinery of all kinds fell by about 75%, meaning that 75% of the machines useful in the Russian economy had been liquidated (or were just not used) by 1998. The only thing that kept Russia afloat was the black market (Graham, 1997).

The state could no longer enforce its laws, and hence, men started not showing up for the draft. Republic after republics declared independence, to be immediately recognized by the US. So, what can we conclude here? Very few deny that Yeltsin was a failure, but a failure of the worst kind. This kind of economic destruction has never been seen before outside of warfare. Government revenues and expenditures collapsed, hence, an already bad infrastructure was made far worse. Believe it or not, from 1992-1999, the Russian government collected about $6 billion all told. Hence, the state did not function.

Interest rates were high, about 300% in 1994 (Graham, 1997), so credit was available only to the very rich, who controlled the (now private) central bank in the first place. Nearly every oligarchical bank was connected with organized crime. In fact, there is no substantial difference between the oligarchs and organized crime.

Russian life expectancy went down to below 60, at least for men.

Medical care collapsed.

The oligarchs financed all of Yeltsin's election campaigns and public image in Russia at the time. The point was to keep Yeltsin in power long enough so that the oligarchs could get their cash out of the country. They knew that eventually, a popular government would punish them. Putin, to a great extent, was this punishment.

Now, Harvard University spent quite a bit of its money to restructure Russia. The US government sued some of them, specifically, Andrei Shleifer, for breach of contract. Many economists from Harvard worked for the state Department so as to be able to control Russia for the ...