Yeltsin has gone mad

Yeltsin’s first volume of autobiography, Against the Grain (1990), showed how he emerged from obscurity as a defender of democracy and social justice. In March 1989, against the wishes of Gorbachev and the Party bosses, he was elected Mayor of Moscow with nearly 90 per cent of the vote. In his second volume, The View from the Kremlin (1994), Yeltsin described how in June 1991 he became the first elected President of Russia. In August of that year – his greatest moment – he stood triumphantly on a tank outside the White House in defence of Gorbachev and democracy against the coup plotters. But over the next two years the struggle between President and Supreme Soviet culminated in his use of the military to suppress the members of the Soviet holed up in the White House in October 1993.

These were stirring times, and Yeltsin was at the centre of the stage. The latest volume of his autobiography begins with the State Duma elections of December 1995 and ends with his resignation from the Presidency four years later, a period known in Russia as ‘The Time of Troubles’, after the period of anarchy and foreign intervention in the first decade of the 17th century. By December 1995, Yeltsin’s fortunes were at a very low ebb. Production had already declined under Gorbachev; under Yeltsin the decline became a crisis. By 1995, in the course of the lurch towards a capitalist economy, national income and industrial production had fallen to about half their levels in 1990.

The privatisation of industry which accompanied this decline is graphically described by Roy Medvedev. At first, vouchers were issued, which were supposed to give every citizen an equal share of state property. This merely led to the transfer of industry into the hands of its old managers. Yeltsin then launched the so-called ‘monetary phase’ of privatisation. Its architect was Anatoly Chubais, the darling of many Western economists, but within Russia the most unpopular of all public figures. Yeltsin characterises him in retrospect as ‘an absolute Bolshevik in his temperament and approach’, while Medvedev dismisses him as an insolent and shameless ‘card sharp’. Chubais frankly stated that ‘the creation of private property was an absolute goal.’ By the end of 1995 most state industry had been sold off to a handful of financiers of doubtful origins. Yeltsin admits that ‘property was sold at bargain-basement prices,’ but claims that ‘privatisation had to be done quickly … in order to create a class of property owners.’ Boris Berezovsky, one of the most brazen of the financiers, described this achievement as ‘the rule of the seven bankers’ (semibankirshchina). This is a grimly amusing play on the notorious ‘rule of the seven nobles’ (semiboyarshchina) during the earlier Time of Troubles – the seven noble boyars took over the state from the Tsar in 1610, and were soon themselves thrown out by the invading Poles.

The rule of the financial ‘oligarchs’, as they are now universally known, was not benevolent. Yeltsin acknowledges that their rise took place in a climate of ‘corruption and theft’. Huge amounts of Russian capital were transferred to the West, and total investment in Russia fell by two thirds. Yeltsin’s first term as President saw a precipitate drop in the standard of living, a very sharp increase in social inequality and a marked decline in life expectancy. According to Chubais, the inequality was inevitable and even desirable: ‘you cannot expect everyone to live a comfortable, pleasant life,’ he declared. When he was accused of improperly accepting while in office a large honorarium for a book on privatisation, he contemptuously described it as ‘a paltry one hundred thousand dollar advance’. And Yeltsin, who had become popular as candidate for Mayor because he mixed with ordinary people on buses and tube trains, now lived like a king.

Yeltsin’s approval rating in the polls fell to 3 per cent. The Communists and their allies secured a majority of the seats in the December 1995 elections. Almost every observer thought that Yeltsin’s political career was over. Yet he was elected President for a second term in July 1996; and four years later secured the election of Putin, his chosen candidate for the Presidency. Midnight Diaries presents Yeltsin’s view of this political double miracle. The book is an exercise in self-justification, but provides much revealing information along the way.

Yeltsin is fairly candid about the factors which changed his fortunes in the first half of 1996. Early in the year he met with six of the oligarchs at their initiative. ‘We don’t have anyone to make a deal with,’ they told him. ‘The Communists will hang us from the lamp-posts.’ Accordingly, they offered him ‘all their resources – media, regional contacts and funds’, and proposed that Chubais should occupy the leading role in the campaign. The funding was lavish. Yeltsin mentions one of the great scandals of the campaign, without explaining it. Two of Chubais’s aides were caught by the security services with half a million US dollars in a cardboard box. On the following day Yeltsin dismissed Aleksandr Korzhakov, the head of the security services and one of Chubais’s enemies, who had ordered the detention of the aides.

At the heart of Yeltsin’s campaign was a radical change in policy. Even before the election, he abandoned his crude anti-Communism of the early 1990s in favour of a more conciliatory, patriotic version of the past. At the outset of the 1996 campaign he replaced Andrei Kozyrev, the pro-Western foreign minister, with the more nationalist Yevgeny Primakov. He dismissed several of his own assistants who were strong supporters of the free market, and launched a programme of social reform. He increased pensions and students’ stipends, paid out wage arrears and made substantial grants to science, education, health and ailing industry. Medvedev tells us that Gennady Zyuganov, the Communist Presidential candidate, complained that Yeltsin ‘is carrying out 80 per cent of our programme’. Yeltsin understandably has little to say in his book about these populist measures – a few months after his election he annulled most of them.

Yeltsin had decades of experience as a Soviet industrial manager and senior Party official, and was a master of political tactics – when he put his mind to it. During the campaign, General Lebed, the third most popular candidate, was allowed to appear frequently on television. In the first round of the election on 16 June he drew support away from Zyuganov, and received 15 per cent of the votes. In the second round, only Yeltsin and Zyuganov remained as candidates. Yeltsin immediately set about winning over the Lebed supporters. On 18 June he appointed Lebed as secretary of the Russian Security Council. For his part Lebed asked his followers to vote for Yeltsin. The ploy worked: on 3 July Yeltsin was the victor, with 54 per cent of the vote. Three months later, Lebed was dismissed and has since sunk into obscurity.

In the middle of the elections Yeltsin had a major heart attack. Later in the year he had a quintuple bypass operation. He dealt with this crisis by deciding ‘to prevent any leaks about my illness and hold back information from everyone’. No hard news about his illness appeared until after he had been re-elected.

The decisive reason for his victory was that most people disliked the alternative. In Poland and other Eastern European countries, voters, disillusioned with capitalist shock therapy, opted for Communist candidates with a social-democratic programme. But Zyuganov was not a social democrat. In a long chapter Medvedev describes his chauvinism, his ‘tendency to rehabilitate Stalin and Stalinism’, and his chilling belief in an international conspiracy against Russia in which Jewish capital plays a major role. Russian friends of mine who hated Yeltsin and his policies swallowed hard and voted for him in his straight fight with Zyuganov in the second round. Even so, Zyuganov got 40 per cent.

Yeltsin’s second term began well, seemingly. Chubais and other enthusiasts for the rapid completion of the transition to capitalism were placed in charge of the economy. A certain weight and stability was provided by Viktor Chernomyrdin, who remained Prime Minister. Chernomyrdin, who had been in office since the end of 1992, was an old-style industrial manager, closely associated with the state-run oil and gas industry. The oligarchs also continued to support Yeltsin, who met with them as a group to discuss major policy issues – something like a capitalist Politburo.

In 1997, optimism prevailed among Yeltsin’s elite. For the first time since 1990, production ceased to fall. Inflation dropped to a mere 11 per cent. Medvedev cites the rosy forecasts made by Yeltsin’s advisers at the end of the year. ‘Nothing,’ Chubais declared, ‘can stop Russia from a long, steep, powerful upward trajectory of growth, constantly gaining in strength.’

The underlying economic and social conditions had not improved, however. The outflow of capital continued. Investment within Russia declined still further. In the autumn of 1997 the Asian financial crisis led to a sharp fall in the world price of oil, Russia’s main export. In the face of these difficulties the Government, with the backing of the IMF, sought to maintain the value of the rouble by issuing short-term bills (the GKOs). In March 1998, Yeltsin tried to keep up the pace of economic transformation by appointing Sergei Kiriyenko, an unknown young reformer, as Prime Minister, in place of Chernomyrdin. This made little difference. The interest rate on the bills increased from 20 per cent in the autumn of 1997 to over 40 per cent in May 1998. Wage arrears mounted in both the state and private sectors.

In May 1998, social unrest erupted on a scale not seen for a decade. In 1989, the miners had gone on strike in favour of Yeltsin and the free market, which they believed was in their interests. In 1998, completely disillusioned, they blocked the railways in opposition to Yeltsin. Both Yeltsin and Medvedev treat the ‘war on the rails’ as a key moment in the plunge into crisis. Yeltsin describes how one of his Vice-Premiers, in a panic, raced from district to district to appease the miners, ‘signing agreements almost without looking at them’. One agreement even stipulated that Yeltsin be dismissed. Yeltsin wryly remarks that he filed a copy of it as ‘clear evidence that the Government was nearly incapacitated’.

In the hope of containing the crisis, the IMF provided a substantial rescue package. But the yield of short-term bills continued to rise, reaching over 100 per cent in August. On 17 August the Government froze the bills, and devalued the rouble. Many Russian citizens and institutions lost their savings, and average incomes fell sharply.

Yeltsin now made the most dramatic of all his many changes of personnel. He appointed the veteran Soviet official Primakov as Prime Minister; the former head of the Soviet State Planning Commission was placed in charge of the economy. Primakov had been publicly critical of the whole course of economic reform, and had called for a significant increase in the role of the state in the economy in general, and in industry in particular. His appointment greatly alarmed Western economists but was strongly approved by the Russian public. Most Russians, while rejecting the Communist Party and its restrictions on freedom, had throughout the years since the fall of Communism consistently favoured a welfare economy in which the state played a large part. In September 1998, 70 per cent of the population favoured renationalisation of the major privatised companies. Medvedev, who disapproved of almost all Yeltsin’s previous appointments, thought it possible that Primakov ‘would steer the Russian ship of state, which had suffered a great deal of damage, in the proper direction’.

In the aftermath of the August collapse Primakov was in the ascendant. The devaluation of the rouble put up the price of foreign imports and gave a boost to Russian industry (Gordon Brown please note). The world oil price recovered, and this assisted exports. In spring 1999 Primakov’s popularity rating reached 70 per cent. Yeltsin was anxious to secure a suitable successor in the forthcoming Presidential election. His rating was now down to 2 per cent, and in any case he was barred by the Constitution from standing for a third term. The succession had already been a factor in his decision to dismiss Chernomyrdin a year earlier; he wanted a younger, more market-oriented candidate. In his autobiography he writes that Primakov ‘would not be right for the Presidency’; ‘he had too much red in his political palette’. Medvedev claims, however, that it was Primakov’s determined effort to root out corruption in the economy – not sparing the richest families – which ‘sparked the intrigues against him’. At all events, in May 1999 Yeltsin summarily dismissed him.

But who could be put forward as a Presidential candidate with any hope of success? After unsuccessfully trying out Sergei Stepashin, on 9 August 1999 Yeltsin appointed as Prime Minister the almost unknown Vladimir Putin, head of the security services, and announced that he would be a worthy candidate for President. Yeltsin engagingly entitles the chapter describing this event ‘Yeltsin Has Gone Mad’. He tells us that he had long been looking for ‘a new general to appear, unlike any other’, and that this ‘general’ appeared in the person of Colonel Putin (in a bizarre incident, Yeltsin offered to promote Putin to the rank of general, but Putin wisely refused). Yeltsin claims that Putin had shown his mettle as head of the security services – ‘he did not leave a single radical group in peace.’

Putin soon had the opportunity to display his mettle to the wider public. In September, in mysterious circumstances, two large apartment blocks were blown up in Moscow, with many deaths. Putin and Yeltsin attributed the bombings to Chechen terrorists, and this enabled them to secure public support for an all-out war against the separatists.

The war proved to be a particularly powerful version of the Falklands factor. In the December 1999 elections to the Duma a brand-new ‘Unity’ party, endorsed by Putin, received a remarkable 23 per cent of the vote. This was only 1 per cent less than the Communists, and far more than the party supported by Primakov. The Communists and their allies were reduced to a minority in the Duma.

Yeltsin’s last significant political act as President – his resignation on 31 December 1999 – was a masterstroke. In accordance with the Constitution, Putin served as acting President during the Presidential campaign. In March 2000, in the first round of the election, he was elected outright with 53 per cent of the vote.

The support for Putin was not just an outcome of the Chechen war. Most Russians had long felt humiliated by the decline of their country as a world power, which left it unable to prevent what they saw as the aggressive and unjustified expansion of Nato. During the Kosovo war, I received a dramatic phone call at home in Birmingham from an indignant Russian economist in Moscow, who reprimanded me for the aggressive British attitude to the Serbs. Most Russians were also thoroughly fed up with the disorder and corruption which had replaced what they saw as the good order of the Brezhnev years. Many Russians have a naively optimistic view of political freedom in the West, and they wrongly concluded that by Western standards there was no democracy worth defending in Yeltsin’s Russia. Putin, they believed, could bring energy, decisiveness and stability to their chaotic country.

Medvedev’s short book Zagadka Putina (‘The Putin Enigma’) reflects the dilemmas faced by Russian democrats of the Left. Medvedev, a dissident under Brezhnev, and still a socialist today, takes quite a favourable view of Putin. He concludes that Putin’s ‘tremendous energy and application, and his call for the development and rebirth of Russia, has given rise to the special attitude of many Russian citizens to Vladimir Putin … A new era is beginning in the history of Russia, and one would like to believe that it will be better and purer than all the eras we have behind us in the 20th century.’

Yeltsin goes even further, and claims that Putin ensured the triumph of political freedom and a democratic market, saving Russia from the ‘brutal, bureaucratic “crony” capitalism’ supported by Primakov and his ally, Yuri Luzhkov, the Mayor of Moscow. This is far-fetched. Putin, like Yeltsin, received strong support from the oligarchs. Putin, like Primakov, thinks that Russia needs a strong state. And in office he hasn’t done much for political freedom. He has carried on the war in Chechnya and relentlessly pursued the two oligarchs who used their TV channels and newspapers to attack his regime. Such actions make him look more like an authoritarian than a democrat.

So far Putin is in a strong position. He is taken seriously by other world leaders. The Russian economy has been doing well. In 2000 the national income increased by about 7 per cent, and there was a large surplus in the balance of payments. The devaluation of the rouble and the high world price of oil largely explain this success, and expert opinion is divided on whether it will continue. In the meantime Yeltsin and Medvedev both continue to endorse Putin, and most Russians still approve his conduct as President. Primakov’s party generally supports his policies in the Duma, and the Communists do not always oppose them. But much remains to be done if Putin is to avoid a further political and economic crisis.