Since the collapse of the Soviet Union at the end of 1991, the pendulum of domestic and international opinion on Russia has swung violently between irrational exuberance and irrational pessimism. The wild euphoria of the early 1990s evaporated after Russia’s financial crisis in August 1998, when the country defaulted on its sovereign debt and devalued the ruble. The optimists fell strangely silent and the pessimists felt spectacularly vindicated, writing off Russia forever and blaming the usual suspects for the catastrophe: a weak and corrupt state and government, the flawed economic and privatisation policies under President Yeltsin and – of course – the international financial institutions, especially the IMF.
In the new millennium, little has changed in these perceptions of Russia. A president with a KGB background, the arrest of Mikhail Khodorkovsky, the overwhelming victory of the pro-Putin party in the December Duma elections, the muzzling of the media – it is obvious that the country is becoming more authoritarian! Equally obviously, Russia is only doing well economically because of high oil prices.
A closer look at both Russia and the Soviet Union, however, quickly reveals that these stereotypes, eagerly fed by the Russian and Western media alike, fail to do justice to the complexity and contradictions of modern Russia and that both the optimists and the pessimists have called the country wrong time after time. The results are distorted views of Russia at home and abroad and an almost universal inability to step back and appreciate the major progress Russia has in fact made since the early 1990s. Far too many people now forget that, in the late 1980s, Moscow’s shops were almost empty, foreign travel was virtually impossible, and fear was the tenor of daily life – even under the much-vaunted perestroika.
Economists and political scientists, trained as they are to think in structures, often naively believe that if the right institutions and policies are in place, then political, economic and social development will follow automatically. Many of the Soviet experts in the 1980s argued that most, if not all, of the country’s ills were due to the central planning system. Once it was dismantled, the Soviet Union, with its huge natural wealth, would be transmogrified virtually overnight into an America or a Japan, a Switzerland or a Germany.
They failed to understand the centrality of history, tradition and culture in the development of a market economy and democracy, overlooking how the West took hundreds of years to reach its present levels, and that this “progress” was accompanied by massive violence, including civil and international wars.
Many of the Western experts in the early 1990s, most of whom could not speak Russian, not only bought into the belief that institutions and policies alone solve all problems, but also seemed painfully unaware that, by the late 1970s, the Soviet Union was facing a massive systemic crisis, with major problems on the economic front and powerful latent nationalities conflicts, not to mention huge challenges in foreign affairs in the shape of Western and Eastern Europe, Afghanistan and U.S. President Ronald Reagan’s Strategic Defence Initiative (SDI).
A recent example of how such inconvenient facts are ignored can be found in the much-praised book “Globalization” by Joseph Stiglitz, a Nobel Laureate in Economics and a former chief economist at the World Bank. In his strenuous efforts to slam the IMF and all its works, including its policies in Russia, Stiglitz does not even discuss the economic and other problems of the Soviet Union in the 1970s and 1980s, and conveniently ignores the fact that output in the Soviet Union actually began falling from the mid to late 1980s, and not from the 1990s as a result of IMF-inspired policies, as Stiglitz would have us believe!
The idea that a country with a history like Russia’s could develop like Poland or Hungary, let alone the West, was preposterous from the start. It is no coincidence that the same unrealistic expectations brought disappointment in the German Democratic Republic – a country that had been under authoritarian rule since 1933. Seen against the background of Russia’s violent history since 1914, Russia has in fact done remarkably well since the early 1990s. It has, for instance, recovered far more quickly and far more successfully from its one major economic crisis than, for example, Argentina.
During the 1990s, Russians and Westerners complained vociferously about the rampant corruption and crime under Yeltsin, while many feared the Balkanization of Russia, ? la Yugoslavia. But when Putin talked about the “dictatorship of the law” and reasserted Moscow’s power over the regions, most observers saw this move as a return to authoritarianism. It was rarely considered that this policy might – just might – be a possible solution to Russia’s problems, and that it was necessary to prevent the massive geopolitical instability that would have ensued had Russia actually collapsed, unlikely as this may have been.
And, of course, after the runaway victory of the pro-Putin United Russia party in last December’s Duma elections and Putin’s landslide win in March, commentators are even more worried about authoritarianism and the supposed lack of democracy than they were in 2000 – despite an overwhelming popular mandate for Putin and further reform. As always in Russia, implementation will be hard, but the chances for seeing real progress on a broad range of reform issues is now better than during any time since 1991-1992.
These constant swings of opinion belie the fact that Russia has always been far more stable than people suppose. After his heart attack in 1996, most commentators came to see President Yeltsin as increasingly capricious and unpredictable. His sacking of prime minister Viktor Chernomyrdin is a classic example. On 23 March, 1998, Reuters noted that ‘[a] surprised world took President Boris Yeltsin’s shock dismissal of his entire government on Monday in its stride…’
During his second term in office from 1996, however, Yeltsin often warned the Cabinet that heads would roll if it did not get the economy going and meet the state’s commitments to public sector workers and pensioners. This was hardly a state secret: Russian national television frequently showed Yeltsin berating the Cabinet! Yeltsin made a similar warning in his State of the Nation address in February 1998 and in the past had followed up similar threats with Cabinet reshuffles soon afterwards.
And yet, when Yeltsin fired Chernomyrdin in March 1998, it caught the Russian and Western financial markets and media completely off guard, and the fallout in diplomatic and political circles was considerable.
Not long after, pretty much the same analysts were making dire forecasts about the policies of the Primakov Cabinet. Viktor Gerashchenko would increase the money supply and cause hyperinflation and Yuri Maslyukov would return the economy to the old Soviet command system. Paradoxically, these forecasts failed to materialize.
This list could be extended almost ad infinitum. Russia is currently booming. Much of this success is obviously due to the high energy prices of recent years, but many observers completely overlook the raft of pro-business legislation passed under President Putin. The tax system, for example, has been greatly simplified, with corporate tax rates reduced and a flat income tax rate of 13 percent. The result – an increased tax take and improved public finances.
Nor are these reforms new either. Many were in fact on the agenda under Sergei Kiriyenko, but were sidelined during the political instability following the financial crash in August 1998. There is far more continuity of policy in Russia than many people suppose.
So the really interesting question about Russia is not its future direction, but why so many get it so wrong so often?
One answer seems to be what the Russian politician Grigoryi Yavlinsky recently called “the scepticism of everybody [in Russia] to everything.” Russians are inveterate complainers. Following the Russian media and talking to Russians, it is easy to gain the impression that things are far worse now than in the 1980s. No wonder Vladimir Pozner said on his weekly talk show recently that it takes a brave [Russian] journalist to say something positive about the country.
Certainly Russian society is far more polarized than during the Soviet period. And, certainly, Russia has neither a free market, nor or a flourishing democracy. There is absolutely no reason why it should have either given its Imperial and Soviet history and just over 10 years of development. But contemporary Russia is far removed from the Soviet Union and, for better or worse, is moving towards a consumer society at a rapid clip. The result is that more and more Russians, including the countless critics, have a living standard beyond their wildest imagination in the 1980s.
Ian Pryde is a business consultant, analyst and journalist based in Moscow. He contributed this article to Russia Profile.
Special to Russia Profile, an online and monthly print magazine dedicated to Russia and published jointly by RIA-Novosti and Independent Media, Moscow.