The real issues in Russian crisis


By Renfrey Clarke

MOSCOW — "What has occurred has been an attempt to concentrate power fully in the hands of the Soviets, to return the Communist nomenklatura to the levers of government, and to seize back the democratic conquests of August 1991." This was how President Boris Yeltsin had his press secretary sum up the proceedings at the Eighth Congress of People's Deputies.

True? Or merely the "sour grapes" of a big-time loser? This question will be less perplexing if the following points are kept in mind.

First, the supplanting of the president as the key source of central authority has not been the most important change in the system of power in the last few months. That change has been a major decline of central authority as such — a pronounced shift of control from Moscow toward the Russian Federation's 19 republics and 83 regions.

The growth in the power of the regional and republican governments has been accelerated by the conflicts in Moscow, as the contending blocs have courted support by promising greater local autonomy. But a more potent factor has been the widespread collapse of Russian internal trade into inter-regional barter deals.

Second, and contrary to Yeltsin's claims, the triumph of his opponents did not mark a return to the political ascendancy of former Communist Party apparatchiks. That ascendancy has never been breached, or even seriously challenged. With strikingly few exceptions, all the leading actors in the current dramas were well-established members of the Communist Party when perestroika began in 1985.

Yeltsin himself was the party boss of Sverdlovsk province in the Urals. There, his reputation was not that of a fighter for democratic rights — such people did not remain at liberty, let alone rise to key party posts — but of a hard-driving autocrat. In their approach to economic reform, Yeltsin and his team have shown typical nomenklatura traits — in particular, a willingness to force policies into effect however horrific the cost to the population.

At the same time, there are important differences in the backgrounds of the Yeltsin team and of the people who will inherit much of its power. Yeltsin gathered around himself representatives of a younger layer of party intelligentsia whose roots were in academia rather than industry. Though lacking more than a sketchy understanding of capitalism, these people were better educated than the bulk of older party functionaries and industrial managers.

Most of these young, educated Communist apparatchiks switched quickly and without embarrassment to championing capitalism once perestroika entered visibly into crisis. For older party officials and economic managers — the people represented heavily in the Russian parliament, elected on a rigged franchise in 1989 — this shift tended to be more traumatic. Nevertheless, and especially for economic ns of "exchanging power for property" were usually compelling.

Hence the great majority of Russian parliamentarians are not opposed to restoring capitalism. The parliamentarians' broadest allegiances are to the Civic Union, a bloc formed around several populist political groups and the Union of Industrialists and Entrepreneurs. The methods of "reform" urged by the Civic Union are sharply different from those of the Yeltsin camp. But the goal is the same.

Economic failure

A further point is that there was nothing arbitrary about the marginalising of the president. Yeltsin was stripped of his key powers not through a political hijacking by his opponents, but for reasons that are routine in democratic states — because his policies were dogmatic and inept, and failed disastrously in practice.

A few statistics illustrate what Yeltsin's measures have cost the population. During the first 13 months of "shock therapy", to the end of January 1993, consumer prices rose 33 times, while average wages rose only 14.2 times. The paper Rabochaya Tribuna recently stated, "The majority of Russians are chronically undernourished. The deficit of high-quality protein is 25%, and of vitamins up to 50%. The energy deficit is around 20%."

Less familiar to Westerners is the fact that by drastically reducing demand, Yeltsin's policies have gone close to strangling capitalism in its cradle. Moscow News reported in February, "Half of the registered small businesses have never done any work at all, another 30% barely make ends meet, and only 3-4% believe they are thriving."

Industry has been devastated, average daily output falling sharply in January to a level 21.8% below that of January 1992 and about 36% below that of late 1989. During February the paper Finansovye Izvestia quoted a senior Economy Ministry official as saying that 70% of machine-building enterprises were threatened with bankruptcy; the proportion of potential bankrupts in other areas of industry, the official revealed, was "also very high", often exceeding half of all producers.

Managers have been especially alarmed by the rapid loss of the country's high-tech industrial capacity, which can be rebuilt only with great difficulty over many years. In the capital goods industry, vital to the retooling of production, output of advanced metal-cutting machines this year is predicted to be only 11% of the figure in 1990.

Skilled personnel are quitting in large numbers from the technically advanced armaments industry, where the paper Business World Weekly recently described the government's program of conversion to civilian production as "a failure". With military orders down by more than two-thirds, the defence factories have been left without funds to restructure their operations. Instead of expanding, output of civilian commercial goods by the "military-industrial complex" fell last year by 22.3%.

Supporters of the government often argue that an initial fall in output is an unavoidable price of introducing market mechanisms to a command-administer economy. But this is simply untrue. In its first year, 1978, the far more intelligently conceived Chinese reform brought an increase in gross national product of more than 11 %.

Loss of support

Inevitably, the catastrophe brought about by Yeltsin's policies has destroyed most of his popular support. A recent survey commissioned by the European Community found that 51% of Russians (as against 27%) felt that their country was "headed in the wrong direction". Elected president in June 1991 with 57% of the vote, Yeltsin now rates little more than 30% in most surveys of his personal popularity.

In these circumstances, it is remarkable, not that ways are being found to force an end to Yeltsin's "shock therapy", but that the population has been so politically demobilised as to allow the president to continue such policies for as long as 15 months.

With the collapse of public support for Yeltsin, the question of political legitimacy in Russia — of the "democratically elected" president versus the "unrepresentative" parliament — has become much less clear-cut.

It is true that opinion polls show the parliament to be even less popular than Yeltsin. But they also indicate that, if parliament were dissolved and re-elected, the big winners would not be the Democratic Choice bloc of Yeltsin's supporters, but his opponents in the Civic Union. Russians might prefer Yeltsin to the parliament, but they want the parliament's policies rather than Yeltsin's.

Civic Union

In the next few months, the Civic Union will almost certainly emerge as the main influence on a revamped Russian government. Within the Civic Union, the key power bloc consists of the industrial managers. Entranced by the thought of becoming capitalists, these managers are often dismayed at the prospect of becoming the major shareholders in bankrupt piles of scrap metal. The strategy for restoring capitalism, they argue, must be drastically altered.

Above all, the industrial managers want continued state support for unprofitable enterprises, through cheap credits and state orders for industrial products. The mechanism they hope to use to expedite the transition to capitalism is summed up by them in the formula "a regulated market economy". Privatisation for these people is a much lesser priority than stabilisation, and this, they argue, is best achieved using administrative methods, which the country at least knows how to implement.

With modifications, the economic program put forward by the Civic Union would probably end the crash and recoup at least some of the lost production. By restoring economic links between regions, it would curb some of the less welcome results of the erosion of centralised o help prevent the further loss of advanced technical capacity. Russians are quite justified in preferring these perspectives to the brutal fumblings of Yeltsin and his team of Thatcherite radicals.

Nevertheless, workers who give tactical support to the Civic Union should understand that they are defending their enemies. The challenge before the Russian left and labour movements is to give a genuine popular and socialist content to the idea of a regulated market economy through democratising the state, massively expanding workers' ownership and control, and preserving state control of monopoly sectors and of those capable of exercising critical leverage on the economy as a whole.

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