There is a Bear in the Woods: False Starts

Tom Warwick

“You can build a throne with bayonets, but you can’t sit on it for long.” – Boris Yeltsin, Russian Federation President 1991-1999

Francis Fukuyama called it “the end of history;” George H.W. Bush referred to it as “a victory for democracy and freedom;” Vladimir Putin declared it “a major geopolitical disaster of the century;” None of them saw it coming. On Christmas Day 1991, the eighth and final leader of the Soviet Union, Mikhail Gorbachev, resigned, declared his office extinct, and handed over all power to the Russian President.  At 7:32pm, the Soviet Hammer and Sickle that flew over the Kremlin was lowered and replaced with the Russian tricolor.  Overnight the world’s oldest, largest, and most powerful Communist state had ceased to exist. The future of this wayward state was now in the hands of Boris Yeltsin. 

In the years directly preceding the fall of the Soviet Union, Boris Nikolayevich Yeltsin had made a name for himself as a sort-of-rebel and anti-establishment figure.  He had become a powerful opponent of Chairman Gorbachev, going so far as to tender his resignation as a member of the Politburo in protest over a lecture he received for allowing two small unsanctioned demonstrations on Moscow streets take place. That act of defiance would endear him to a majority of the Russian people and eventually lead to his election to the Soviet Congress of People’s Deputies and later President of the Russian Soviet Federative Socialist Republic. However, the moment that would really propel Yeltsin into the international spotlight would come during the 1991 “August Coup.” The coup was propagated by members of the higher communist echelons, opposed to the liberal reforms put in place by Gorbachev. While Gorbachev was out of Moscow, coup leaders rose up and declared that a new “Emergency Committee” had been established and would take over the governance of the Soviet Union.  The plan was doomed from the outset. The “drama” of the plan only took place outside of the Russian White House (legislative building), and lasted just a few hours. At the outset, the military elements of the “Emergency Committee” successfully surrounded the legislative building but failed to apprehend any high ranking officials.  As a result, Boris Yeltsin was able to lead a counter movement against the conspirators. Climbing atop a tank stationed outside the legislative building, Yeltsin gave a defiant speech condemning the coup leaders.  This speech was later broadcast across Russia and the world, turning Yeltsin into a figure of world significance, and all but ensuring the failure of the Coup. When, just four months later, the Soviet Union was finally dissolved, it would be Yeltsin who would be tasked with transforming Russia from a communist dictatorship to capitalist democracy.

In days after the fall of the old Soviet government, Yeltsin began to take steps to transform the old soviet command economy into a thriving new market based one.  To achieve this, Yeltsin first ordered the liberalization of foreign currency, market controls, and price controls. He then instituted what he called “macroeconomic stabilization.”  The stabilization involved a series of harsh austerity measures designed to control inflation. Interest rates were raised to unprecedented levels to help tighten money and restrict credit, new taxes were implemented, and steep cuts were made to subsidies and welfare spending in an attempt to bring the national budget into balance. Rather than kickstarting the Russian economy, the new measures had the opposite effect. Russia was pushed into a depression that some economists argue was equal to that of the United States or Germany during the 1930s. Prices began to skyrocket as a credit crunch forced many industries to shut their doors. The living standards of the majority of the population plummeted as inequality and unemployment grew and hyperinflation wiped out life savings. By the end of the decade, the Russian GDP would fall by 50% as tens of thousands of Russians were plunged into poverty.

To help offset some of the economic downturn, and to further deconstruct the Soviet system,  Yeltsin promoted a system of privatization. Yeltsin’s program worked by distributing free vouchers with 10,000 rubles to all Russian citizens that could be used to buy shares in formerly owned state industries.  However, although every citizen initially received a voucher, within months of their being distributed most of the vouchers had been bought up by intermediaries ready to buy them from the average citizen for much needed cash. Further privatization efforts were undertaken in 1995 when, as he struggled to finance Russia’s growing debt and win support from the new business elite for his upcoming reelection campaign, Yeltsin offered a series of of stock in Russia’s most valuable state-owned businesses in exchange for bank loans. While the program was sold as a way to speed up privatization and ensure the government had a cash flow, the truth is that it was effectively a free gift to a small group of finance, industry, energy, and telecommunication tycoons who would come to be known as the “oligarchs.”

Given the state of the economy and the ongoing skirmishes with separatists in former soviet republics, many expected that Yeltsin’s political career was over. Nevertheless, Yeltsin announced that he would seek a second term. From the outset, his chances seemed slim and the election was riddled with controversy. The controversy centered primarily on the manipulation of the media, financial irregularities and the possibility of ballot stuffing.  In their book Assessing Russia’s Democratic Presidential Election, Graham Allison and Matthew Lantz found that Yeltsin earned “53% of all media coverage of the campaign, while his main opponent claimed only 18%.” Additionally Allison and Lantz evaluated the bias of this new coverage by assigning a “score” for each candidate. A positive story was worth 1 point and a negative -1, In the first round of voting  Yeltsin scored +492 and  Zyuganov -313 in the final round Yeltsin scored +247 and Zyuganov scored -240. It is believed that this overwhelming bias comes from the fact that “the government continues to own two of the three national channels and to provide the majority of funding to most independent newspapers.”  Additionally Yeltsin left no question that “the payer of the piper was calling the tune” and even fired one TV director during the campaign and replaced him with one who would continue to “kept the government line” for the duration.

When it came to campaign financing, the Allison and Lantz also found that while election rules specified that a campaign could spend up to $2.9 million, the “estimates of the cost of Yeltsin’s campaign range well into the hundreds of millions of dollars” with massive amounts of money being spent on TV advertising and travel for Yeltsin and his staff (Allison and Lantz).  While still not completely proven, Allison and Lantz also found irregularities that indicated the possibility of ballot stuffing.  For example, in Chechnya, a region that international observers believed to have fewer than 500,000 adult residences, the Central Electoral Commission counted one million votes; 70.0% of which were for Yeltsin. The team also found similar instances in Tatarstan where “it is clear that votes tallied for Lebed, Yavlinsky, and Zyuganov in the first round were, when summed by the regional election officials, transferred to the Yeltsin column.”  

Yeltsin entered his second term battered, bruised, and tainted with the accusations of a stolen election. To make matters worse, Yeltsin had fallen into a deep alcoholism and not long into the term would be rushed to the hospital for quadruple bypass surgery. His new administration would be plagued by corruption, and opponents accused him of embezzling money given by the International Monetary Fund and other international financial organizations. And just when Yeltsin’s approval numbers were hitting a new low, the bottom dropped out from under the Ruble when his government defaulted on its debt payments, triggering yet another financial panic. To try and rebuild confidence in the government, Yeltsin dismissed his entire cabinet, and then he did it again, and then again, and then a fourth time just for good measure. With a failed impeachment attempt in the State Duma, and ever shrinking popularity, Yeltsin would finally relent.  On New Year’s Eve 1999, in a televised address to the nation, Yeltsin acknowledged the “errors of his rule” and said that Russia needed to enter the “new century with new political leaders.”  Tell his people:

“I want to ask for your forgiveness, that many of our dreams didn’t come true. That what seemed to us to be simple turned out painfully difficult. I ask forgiveness for the fact that I didn’t justify some of the hopes of those people who believed that with one stroke, one burst, one sign we could jump from the grey, stagnant, totalitarian past to a bright, rich, civilized future. I myself believed this. One burst was not enough… but I want you to know – I’ve never said this, today it’s important for me to tell you: the pain of every one of you, I feel in myself, in my heart… in saying farewell, I want to say to every one of you: be happy. You deserve happiness. You deserve happiness, and peace.”

In the end, Yeltsin’s legacy would be a mixed one. The man whom so many hoped would bring freedom and stability to Russia would not only fail to do so, but he would usher in the very things that, today, are working actively to prevent it. As Yeltsin left the Kremlin that cold December day, with the Russian economy in shambles and its national prestige diminished, he left his country’s hope for democracy in the hands of his Prime Minister: Vladimir Vladimirovich Putin.

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