The National Interest
Summer 2001

Poltergeist Economics

by Anatol Lieven ₁

 

Peter Reddaway and Dmitri Glinsky, The Tragedy of Russia’s Reforms: Market Bolshevism Against Democracy (Washington, dc: U.S. Institute of Peace, 2001), 745 pp., $29.95.

Paul Klebnikov, Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia (New York: Harcourt Brace, 2000), 400 pp., $28.

Stephen F. Cohen, Failed Crusade: America and the Tragedy of Post-Communist Russia (New York: W.W. Norton, 2000), 304 pp., $21.95.

The Russian revolution of the 1990s was rather like a Hollywood poltergeist movie. Mysterious, hidden forces moved enormous quantities of property from place to place, spectacularly destroying much of it and the surrounding landscape in the process. Colossal industries and vast sums of money vanished into thin air. So too did millions of lives, but since these mostly belonged to unimportant extras—pensioners, children, workers, soldiers, Chechens—the Western audience could gasp with pleasurable horror while continuing to munch its popcorn.

There is even some sketchy appearance of the obligatory happy ending. What is left of the property has returned to earth and is firmly tied down by someone or other. The victims go on being quietly buried. The teenage poltergeists too have settled down. These "bold young reformers", as the more gullible or fanatical sections of the Western media never ceased to dub them, were evidently too young to exercise moral judgment, and must be left in undisturbed enjoyment of their stolen property. Innocent victims of forces beyond their control, they are being rehabilitated into the Western economic community with the help of distinguished American PR firms. And every Russian can take comfort in the fact that the biggest poltergeist of all now runs the Russian electricity system.

Peter Reddaway and Dmitri Glinsky’s history of this catastrophic process is the richest and most detailed yet to appear, and is of timeless value as a record. Its conclusions are supported by Stephen Cohen’s interesting, if one-sided, collection of essays on the same subject, and by Paul Klebnikov’s more popular, well-written and brilliantly revealing biography of Boris Berezovsky.

It is a striking sign of just how deep Russia’s catastrophe has been that Reddaway and Cohen should have found themselves in much the same camp. Cohen is a Marxist whose earlier books on Soviet history were written from the standpoint of support for the (relatively) moderate and humane strand of communism represented by Nikolai Bukharin, which was bloodily destroyed by Stalin. Despite his loathing of Stalinism and contempt for the rulers of the Brezhnev era, Cohen retained an evident sympathy for the basic Soviet project.

Peter Reddaway, by contrast, is an eminently conservative figure and a veteran and passionate critic of the Soviet system. In the 1970s and 1980s, he did more than any other person in Britain to expose Soviet crimes against dissidents and bring them to the attention of the British public. However, his hatred for communist rule as a profoundly immoral system was rooted in beliefs and principles that also explain his hatred of the post-Soviet order—or disorder—and of the Western role in its creation.

These principles include a deep concern for ordinary Russians and a profound understanding of the richness of the Russian intellectual and cultural tradition—as well as of the appalling and deliberate damage done to it by communism and now by post-communism. This is a welcome change from the common Western tendency to use "Soviet" and "Russian" as virtual synonyms and indulge in ignorant contempt for both. It also marks out Reddaway and Glinsky’s work from the grotesque belief of too many Western reformers in the 1990s that post-Soviet Russia was a "blank slate" on which to scribble their experimental designs.

However, this awareness does contribute to one flaw in Reddaway and Glinsky’s book: It makes them a good deal too optimistic about the prospects of a truly democratic alternative to the Yeltsinite order, had it been given a chance. For this to have succeeded, an alliance would have had to develop between the more honorable and moderate elements of the old communist order on the one hand and the dissident tradition on the other—something that would have been exceptionally difficult to bring about.

As it was, the alternative to Yeltsin’s rule by the autumn of 1993 appeared to be the forces that had taken over the Russian parliament—and these did not seem at the time to be a viable or positive alternative. It may well be true, as all three books convincingly argue, that Yeltsin and his staff deliberately helped the parliamentary radicals to gain the ascendancy and then maneuvered them into coming out onto the streets—the intention being to wreck a compromise plan for new elections being prepared by Russia’s governors, and to give the regime a chance to crush the opposition by force. Given the amount of bigoted Western propaganda against anyone who questioned Yeltsin’s "reforms", Reddaway and Glinsky are correct and courageous to point out that the parliamentary opposition contained individuals who were much more honest, patriotic and economically sensible (from the point of view of Russia, not that of their own pockets) than their equivalents in the regime.

Nonetheless, when I visited the parliament repeatedly in the weeks and months leading up to the events of October 1993, I was left—and remain—profoundly skeptical about that institution’s capacity to generate any kind of effective government. In the event of a parliamentary victory, it seemed at the time that there was a real risk of Russia going the way of Georgia in 1990–93, with bitter infighting between different would-be charismatic leaders, the collapse of central authority, the rule of nationalist fanatics and street thugs, ethnic revolt and civil war.

For the melancholy truth is that decent communists had by then been badly overtaken by the speed of change. Most of Russia’s truly democratic intellectuals for their part lacked all administrative capacity and were fatally given to striking politically irresponsible moralizing poses—while the ex-communist intellectuals who joined Yeltsin either possessed no morals to start with (like the brutal and repulsive Gennady Burbulis, Yeltsin’s then chief of staff) or soon lost whatever ones they had.

Yet to say this is certainly not to excuse the character and behavior of the Yeltsin regime. Yeltsin’s own entourage was utterly corrupt, from the aides who in 1992 sold interviews with the president to the international media for $30,000 apiece, to the tariff-free import rights given to the "Sports Fund" headed by Yeltsin’s friend and tennis coach, Shamil Tarpishchev—which led to the biggest vodka-smuggling operation in Russian history and contributed appreciably to the undermining of Russian health. Yeltsin’s own family was closely implicated in the corruption, especially via Aeroflot, headed from 1997 by son-in-law Valery Okulov.

The entire privatization process was driven by a curious mixture of Western-endorsed ideological fanaticism and a manic greed that often destroyed industries with long-term value in the search for short-term loot—a very Bolshevik mixture, as Reddaway and Glinsky’s title implies. This process reached its apogee in the autumn of 1995 with the "loans for shares" deal, brokered by Yeltsin aid Anatoly Chubais, in which Russia’s principal oil and metal-extraction industries were distributed to Berezovsky and other crony capitalists for a tiny fraction of their true value. In return, these pledged their (illegal) financial support to Yeltsin’s re-election campaign—a support that they would have had to give anyway, on the assumption that they did not wish the communists to return to power.

What of the role of the Clinton administration in all this, which all three authors strongly condemn? Clinton, Gore, Strobe Talbott and others certainly wittingly or unwittingly turned a blind eye to Yeltsin’s appalling domestic record, including both kleptocracy and the catastrophic decision to launch the first invasion of Chechnya in December 1994. For a long time most of the Western media parroted the official Western line that "in the end, Yeltsin has always done the right thing."

However, as Reddaway and Glinsky emphasize, the well-being of the Russian people was only part of what American support of Yeltsin was all about. The other part was advancing the U.S. national interest in a compliant Russian external policy. They and Cohen argue that this policy utterly failed, and that, by attaching the reputation of the United States to such a discredited regime, Washington helped create the anti-American backlash that now characterizes so much of Russian policy and public attitudes. This is certainly true, and sad to see in the wake of the deep respect for the West held by most of the Russian intelligentsia and much of the population in the early 1990s.

On the other hand, paying bribes to foreign rulers to gain some kind of cooperation or compliance is an ancient and legitimate diplomatic tactic. It seemed to pay off in the case of the Kosovo war, where the Russian government helped dig nato out of the hole into which it had wantonly jumped. If Moscow had backed a diehard Serbian resistance and forced nato to launch a ground war, it would have stood an excellent chance of destroying nato from within. That this path was not taken must owe something to the assiduous cultivation of Yeltsin and Chernomyrdin by Clinton and company.

In that sense, at least, the Clintonites may have been "realists" despite themselves. It is true that they were unable to see the difference between U.S. interests and Russian ones and thus deluded themselves into thinking that Yeltsin was good for both. Unlike some of their self-styled realist critics, however, they recognized that it was not possible to gain Russian subservience to U.S. policies without having to pay for it.

There has also been an ugly aspect to some of the endless complaints about the theft of U.S. aid to Russia. This aid was small not only in comparison to the financial gain to the United States from the end of the Cold War, but also to the flight of stolen capital from Russia in the Yeltsin years. And where, pray, did this stolen money go? Pluto? Alpha Centauri? As Paul Klebnikov brings out, the looting of the Russian economy would not have been possible without the enthusiastic collaboration of Western banks and trading houses, and the money went to fuel Western stock market and real estate booms from which the West in general has benefited. If the Yeltsinite elite had the morals of whores, then the West certainly provided their pimps.

Instead of conducting what is in the end a sterile party debate on U.S. policy in the 1990s, Americans would do better to concentrate on some deeper lessons of the Russian debacle. Chief among these is the proof that markets are not "self-regulating." The creation of a "civilized" free-market state requires not only strong institutions but also ethical traditions that go beyond the search for personal gain and are credibly embodied in at least some public figures and other symbols. From this point of view, the analysts who seek comforting parallels for Russian developments in nineteenth-century America could hardly be more mistaken: Abraham Lincoln was not an idle drunkard whose family became obscenely rich at the expense of the state; Andrew Carnegie did not steal existing state industries at gunpoint and then consistently fail to invest in them, while moving most of the profits into foreign bank accounts and spending the rest on luxuries and sex.

This is where Clinton’s pardon of Marc Rich is so damaging. As Klebnikov demonstrates, Rich’s crimes against the American taxpayer are dwarfed by his role in the criminal plundering of Russia. The pardon is being portrayed in Russia as additional evidence that U.S. moralizing advice is deliberate hypocrisy. But that is far from being the worst of it. In Yeltsin’s Russia, ordinary people saw their savings and living standards destroyed even as their rulers openly looted the country. As a result, for Russian leaders to ask ordinary people not to steal or take bribes is not just fatuous, it is downright immoral. A disastrous cycle of omnipresent corruption has been created with no evident way out.

Anatol Lieven is a senior associate at the Carnegie Endowment for International Peace. Back