The Russian Election Compendium: State of Russian Union Analysis

MEMORANDUM

Strengthening Democratic Institutions Project
John F. Kennedy School of Government To: Friends of the Strengthening Democratic Institutions Project

From: Graham Allison

Date: March 15, 1996

Subject: Update on the Russian State of the Union

I. States of the Russian Union

In continuing our efforts to update friends on the Russian political scene, Harvard's Strengthening Democratic Institutions Project (SDI) has prepared this brief analysis of two recent assessments of the state of the Russian Federation. The first comes from Russian President Boris Yeltsin who gave his constitutionally mandated State of the Union address to a joint session of parliament on February 23. The second comes from an article written by SDI Senior Research Fellow and former Financial Times Moscow Bureau Chief John Lloyd. Both Yeltsin and Lloyd see grounds for hope in Russia's future, but the road to democracy and reform will continue to be turbulent.

II. Yeltsin's View

Yeltsin's fifty minute speech in the Kremlin was overtly political. Having just announced his reelection bid, he used this forum to praise his accomplishments of the last five years and to place himself as the only presidential candidate qualified to handle the rigors of the office.

Bottom lines:

• Russia has come a long way: The June parliamentary-government no-confidence crisis was resolved by civilized means; two successful parliamentary elections have occurred; Russians can now travel freely; censorship of international media and a single state ideology no longer exist; and freedom of expression, press, and assembly are rights of all Russian citizens.

• Reform of the economy was necessary and the only way to guarantee a hopeful future. It is beginning to yield results: inflation is down and declining production has bottomed out.

• Reformers failed to establish a proper dialogue with the people to explain what they were doing and why it was necessary. Consequently, the people's patience ran out. "We have come to that very dangerous point beyond which fatigue and discontent may outweigh perseverance and hope among the people." Russia now needs reform that will "develop the market while cutting down the social costs of that process...in a way that would not undercut reform itself."

• Prime Minister Chernomyrdin's government is responsible for addressing the economic and social concerns of the people. "The government will either carry out its duty to defend the social and economic rights of the people or another government will do it."

• The economic priorities for the next two years include: timely payment of wages, cheaper housing for the middle class and military, government support of small business, compensation for savings lost through inflation, federal insurance for bank deposits, improved tax collection, and land reform.

• "People are outraged by the fact that criminals get away unpunished, by all the permissiveness and corruption among bureaucrats, and by the helplessness of authorities to fight these awful phenomena." Government officials regardless of their positions who fail to use government funds for their intended purpose or who delay paying wages and pensions will be punished. Taking a page from the Contract with America, Yeltsin called for eliminating the morass of legal standards which are a spawning ground for bribes.

• Although Russia faces no real military threat for the first time this century, unfavorable geopolitical realities are still possible most importantly, the potential expansion of NATO to the east and efforts to counter Russia's interests in the CIS at a time when CIS integration is deepening on a voluntary level.

• The Chechen crisis will be settled in the nearest future. "We are willing to talk with any political force interested in the establishment of peace in Chechnya, but we are not going to strike any deal with bandits." The expected Chechnya peace plan was not announced.

• The state should reinvigorate its support of culture. Unacceptable forms of mass culture have replaced genuine Russian art, destroying the spiritual mainstays of the younger generation.

III. Lloyd's view:

John Lloyd's assessment of the state of the Russian Union appeared in the Financial Times on January 24.

Bottom Lines:

• Much has changed for the better in Russia over the past decade: overall treatment of its citizens, development of a free press, and beginnings of a political party system. The economy is no longer in free-fall and modest growth is expected for 1996.

• The initial era of "primitive acquisition " among the emerging Russian business class is now giving way to a period of corporate governance, investment, and regulation as Russia begins to enter the world economy.

• Raw material production, particularly oil and gas, is still the basis of Russian trade, but political instability in the country precludes increased investment in this sector which would restore and increase production.

• The unreformed and inefficient agriculture sector remains the largest drain on public finances and a major stumbling bloc to economic development.

• Russia is a much reduced power and must now come to terms with its own new identity relative to the other former Soviet republics. Consequently, in addition to economic trials, Russians face a great psychological hardship as Russia defines its relationships with its region and the world. The resulting anxieties and repeated blows to national pride in Chechnya and elsewhere seem likely to lead Russia at least for the near future into a more confrontational relationship with the West, especially the United States.

• Governing Russia today is difficult because no consensus exists among Russian citizens on the borders of the state, on the bases of Russia's polity, on the ground rules of the economy, and on who should be Russia's friends and enemies.

• Finally and positively Russia is not doomed to duplicate its authoritarian past. Since 1989 it has become a major part of the world and the world a major part of it. This cannot be reversed; one will not be able to ask "Who lost Russia?" Russia in the future will remain an integral player in the world.

IV. Analysis of the States of the Russian Union.

Despite the difficulty of comparing an openly political speech by the sitting president of Russia with an article written by a Western journalist casting a critical eye on the Russian situation, both commentaries are in agreement about the current situation facing Russia. In many areas, Yeltsin and Lloyd concur on what needs to be done to set Russia on a path to normalcy. In other areas, Yeltsin's political rhetoric supports the analysis of Lloyd's article and demonstrates the pressures Russia and consequently the Russian president face.

A. Areas of Agreement:

• Both Yeltsin and Lloyd believe political reforms in Russia signified by the open society of free speech, free press, and free movement are the most significant Russian reform successes. They also agree that although the political freedoms could be curtailed under a less liberal presidency, these reforms are now ingrained into the society's psyche and cannot be taken away. A return to the past in this regard is not possible.

• Both also hold that economic reform was necessary and inevitable, but the reform has proven more painful than initially anticipated. Both point out there is still much to be done, especially in the largely unreformed agriculture sector. They are also in agreement that the achievements to date, namely low inflation and the beginnings of an upturn in production, must not be lost.

• Finally, both believe that Russia has a significant role to play in the world. Current growing pains are to be expected. Russia must redefine itself relative to its realities, while the world must ready itself for the inevitable reemergence of Russia as a major player in the international scene.

B. How Yeltsin's Priorities Reflect Lloyd's Analysis:

• Lloyd stresses in his assessment the physical and psychological pain Russians feel. Yeltsin acknowledges this pain throughout his speech. Although Yeltsin claims to seek low inflation and a continuation of reform, his economic priorities for the next two years focus on easing social pain and thus seem costly and capable of derailing economic reform.

• Yeltsin also demonstrates Lloyd's point of a lack of political and societal consensus by attempting to be all things to all people. Yeltsin woos the reformists with talk that economic reform must continue, while at the same time promising compensation to those hurt by reform. For the West, Yeltsin claims Russia faces no military threat, yet for nationalist voters he declares that the expansion of NATO is the most serious geopolitical challenge to Russia. For those tired of the war, he seeks peace in Chechnya, but refuses to talk with those instigating the rebellion.

V. Conclusion

As Russia continues toward its June presidential election, Yeltsin's and Lloyd's assessment of the realities of Russia and the priorities for the state demonstrate the challenge Yeltsin or any presidential contender will face in the future: a society still redefining itself and an economy on the verge of recovery, but with a populace exhausted by necessary reforms.

In his article, Lloyd demonstrates the magnitude of this dilemma by putting it into a potential US context: What would America feel like "if the central American states acquired strongly anti-American governments. If Canada began disenfranchising all on its territory who had US ancestry, your GDP was dropping through the floor, your allies were joining the Warsaw Pact, and the native Americans had claimed the oil wells and were paying no tax on their output? And if the presidents of Chase Manhattan and Bank America were assassinated (possibly by each other's body guards), Arkansas had declared independence and was paying for it by drug-running and arms dealing...and so on. Uneasy, perhaps?" Yeltsin or any future president must attempt to find solutions to situations which would surely bring any US presidency crashing down at the next election.

Yeltsin attempts to meet this challenge in his speech by taking credit for the good things that have emerged in the new Russia while blaming others for the problems. He threatens to fire his own government if the economic situation does not improve and claims local governors have held back wage payments. In his speech one can see the campaign themes developing for the unpopular president run against your prior policies and blame your subordinates who implemented them. John Lloyd would expect as much from the unpopular president faced with the responsibility of guiding the struggling ship of Russia while running for reelection at the same time.