Russia's Dead End: An Insider's Testimony from Gorbachev to Putin

by Andrei A. Kovalev

  However, the government’s life support system and supply of goods and provisions that previously existed were destroyed and a new system not put in its place. All kinds of expeditions and scientific activity were sharply curtailed. State support was withdrawn from the fleet of atomic-powered icebreakers and the infrastructure of the Northern Sea Route. The result was that by the year 2000, the society and economy of the Arctic, eastern Siberia, and the Far East were in crisis. An entire economic system was destroyed, and a mass exodus of qualified specialists occurred. Many enterprises were shut down. In most regions in the north, the construction industry virtually collapsed. In many cases transportation costs constituted at least half the price of products. The peoples of the north, each of the many numerically small ethnicities, were in a particularly disastrous situation. In several regions there was a very real danger of an ecological catastrophe.

  The uncontrolled outflow of people, specialists above all, from the Arctic to the central regions of Russia triggered by the closure of enterprises and airports and the disbandment of military units led to the destruction of the existing infrastructure, the growth of social tensions, and the upsurge of criminality in the region. With enterprises shuttered, including factories in “one-factory” towns, entire population centers were liquidated. In the period starting from 1991, the population of the Far North District and administratively equivalent localities shrunk by more than a million persons. Because savings had been devalued and moving costs were high, pensioners, invalids, and those who had become unemployed by force of circumstances were unable to leave and turned into virtual hostages. More than 200,000 persons wanted to leave in the year 2000. Meanwhile, an estimated 380 settlements housing more than 200,000 persons were to be closed by the end of 2000.

  Moscow’s impotence impelled the leaders of several republics within the Russian Federation to seek to resolve the old and new economic and sociopolitical problems more autonomously and independently of the center. They also sought to play a more significant role in both domestic and international affairs in their own regions.

  Meanwhile, there was an increase in the activity of various ethnic groups and popular movements of Far Northern peoples as they formulated ideas of national and regional separatism and posited the goal of achieving sovereignty within Russia. The sharpest interethnic friction occurred in several districts of the Sakha (Yakutia) Republic, particularly in the Allaikhovskii District, where the leaders of the Evenki community began dividing up the property of state farms and demanded that the best arable land and pasture be allotted to the native inhabitants. The actions of the local authorities in Yakutia aimed at limiting and restricting the rights of various segments of the population led to a significant exodus of the Russian-speaking population of the region. Starting in 1992, every year on average more than 2,000 persons left the northern districts of Yakutia.

  This trend fundamentally changed the ethnic composition of most of the industrial centers of Russia’s Far North and was among the reasons for shuttering a number of major industrial enterprises. The human and intellectual potential of Russia’s northern regions suffered significantly, given the absence of a broad system of training and retraining specialists.

  Preserving the numerically small indigenous peoples of the Far North remained a pressing problem. Industrial expansion in several northern regions made the survival of these peoples problematic. The broad-scale development of natural resources in Russia’s northern territories drastically undermined the foundations of the traditional economy, as large areas of reindeer pasture and hunting grounds (more than 49.4 million acres) were declared off-limits and many rivers were ruined. The widespread reduction of their natural habitat and degradation of the conditions needed to pursue their traditional economic activities and their way of life could lead to the disappearance of individual tribes.

  It was against this background that the Chinese expansion referred to earlier caused anxieties in Moscow. In long-range perspective, Moscow feared the danger of China’s claims to 579,000 square miles of the Far East and Siberia that it considered historically its own.

  The Region of Kaliningrad

  The dissolution of the USSR highlighted the problem of the Kaliningrad region, which is located between Poland and Lithuania on the southeastern shore of the Baltic Sea and separated from the rest of Russia. It had a population of 941,000 according to the 2010 census and an area of 5,800 square miles, or around the size of Connecticut. The region’s special significance derives from its location in the center of Europe as part of the Baltic Sea zone and its proximity to economically and militarily powerful European countries. The Kaliningrad region possesses an advantageous geographical position at the intersection of the main freight routes from the East to the Northwest. The transportation corridors that cross the region link Russia with Western Europe via the shortest route. Moreover, Kaliningrad contains Russia’s only year-round, ice-free port complex on the Baltic Sea.

  From Moscow’s perspective the military-strategic significance of the Kaliningrad region was much greater than its economic importance since it vastly expanded Russia’s ability to protect its western borders from the sea and anchored Russia’s naval presence on the Baltic. The loss of the Kaliningrad region as a military-strategic zone, an economic center, and an important transportation hub would inevitably signify Russia’s retreat from the Baltic Sea.

  From the establishment of the Kaliningrad region in 1946 on part of the former East Prussia, it was basically used for military purposes. Therefore, the regional economy was wholly financed from the state budget and oriented toward imported raw materials. After the breakup of the USSR, the region was placed in an extremely difficult position because of the virtually complete loss of its productive enterprises’ ties with Russian enterprises. Its contacts with suppliers of raw materials and goods were significantly weakened. On top of this, a sharp decrease in military orders occurred, there was a lack of funds to convert production facilities to civilian purposes, and state support for the fishing industry was cut off. The rupture of traditional economic relations with the noncontiguous regions of the former USSR led to a deeper recession in the region’s economy than that in Russia overall and seriously impacted social stability.

  Realizing that it was impossible to provide broad-scale financial assistance to the Kaliningrad region, Moscow decided to establish a free economic zone in its territory. At the same time, the regional administration received supplementary authority to manage regional development. These steps contributed to the criminalization of the local organs of power. Moreover, regional authorities were granted additional financial powers, in particular the right to retain in the local budget a higher share of tax revenues than regions in central Russia, of hard currency receipts from the sale of regional export quotas, of Ministry of Finance tax credits, and of receipts from the sale of auctioned quotas for imported goods within the framework of the federal earmark program.

  After the breakup of the USSR, the Kaliningrad region changed from an exporter of agricultural products to a major importer, importing up to 85 percent of its foodstuffs. The grain harvest shrank by more than 50 percent, 90 percent of potatoes and vegetables were grown by the local population, the machine and tractor stations decreased by a factor of three, and by the year 2000, 80 percent of them were obsolete. Experts calculated that in order to provide the minimal consumption needs of the regional population, $30 million worth of foodstuffs had to be imported annually.

  Real income and consumer buying power decreased, and the percentage of persons with incomes below subsistence level increased. According to the State Committee for Statistics, 42 percent of the population lived below the poverty level in 1999. According to a sociological survey conducted on March 13–15, 2000, 66.6 percent of respondents rated their material position as “poor.” At the end of 1999, the unemployment rate in the Kaliningrad region was 13.8 percent of the working population, significantly higher than in Russia overall. If one included hidd
en unemployment, then the figure would be much higher. The death rate regularly exceeded the birth rate. In 1998 it was 163 percent; in 1999 it was 180 percent (13,617 deaths versus 7,549 births). The problems of youths were exacerbated by an epidemic of drug abuse, the spread of AIDS, and an ever-increasing rate of prostitution. This list far from exhausts the problems in this area.

  Thus, the Kaliningrad region was in a terrible state. Moscow did virtually nothing to improve the situation. Kaliningrad’s privileged economic status was revoked for good reason. Instead of serving as an instrument for regional economic development, it had turned into a powerful stimulus for the growth of corruption and organized crime. The practically coerced change of governors Moscow initiated did not improve things. This was not surprising, since Moscow paid little heed to the problems in the region, and when issues were brought to its attention, it limited itself (in line with Soviet tradition) to words and administrative measures.

  Russia’s position regarding numerous West European proposals to help it solve the problem of the Kaliningrad region was extremely irrational. Moscow said it was a domestic problem of the Russian Federation and would be dealt with by itself. Meanwhile, the Kaliningrad region continued to collapse.

  Naturally, given certain conditions, Russia will manage to preserve its territorial integrity. Yet hypothetical disintegration scenarios could assume many forms. The following are the most plausible.

  The first candidate for independence from Russia is Chechnya, followed by other republics of the North Caucasus. In this case, one cannot exclude the possibility that the country will break up along the line of the “Islamic arc.”

  There is a considerable chance the Kaliningrad region may secede from Russia, especially since a change toward greater cooperation with the European Union would confer significant economic and social benefits.

  Another candidate for secession from Russia is St. Petersburg and the Leningrad region. This is the most self-sufficient entity with a developed economy, science, education, and culture, and it possesses an outlet on the Baltic Sea and a port infrastructure.

  Although not viable under current conditions, the trans-Ural region, well-endowed with useful mineral and other natural resources, given the right sort of investments might objectively be interested in changing its status. One cannot predict what course events may take here, given the possible competition of potential investors in the region, the Chinese factor, and many other circumstances.

  The transfer of the Northern Territories (the Kuril Islands) to Japan is only a matter of time; such is the historical and political logic.

  If the Kremlin continues to place its bets on the “vertical of power” structure rather than on resolving real problems, Russia may wind up not only without the North Caucasus, Siberia, and the Far East but quite possibly without part of its European territory.

  The Year 2000 Problem

  Thus, in the year 2000, Russia approached an imminent national catastrophe. The federal authorities had virtually lost all control over the situation.

  Something else, however, was troubling the deities in Moscow: what would happen to them personally as a result of Yeltsin’s inevitable departure from power? The coming change of president in accordance with the Constitution was dubbed “the year 2000 problem.”

  The question of who would be the future power holders greatly exacerbated the financial and political crisis of 1998. In this context it needs to be emphasized that—contrary to the assertions of the Russian authorities as well as of widely regarded opinion makers—political, not economic, reasons were the foundation of the negative phenomena occurring in Russia. The economic difficulties that the country was experiencing were among the consequences of Russia’s failure since 1992 to devise genuine foreign and domestic policies. As a result, the traditional Soviet dualism—that is, the disparity between political declarations and actual goals and plans—continued to prevail and was rife with unforeseeable consequences. Overall, the desire of the executive authorities to guarantee their own personal security played the decisive role in determining their actions in the course of events.

  The upcoming election campaign of the “party of power” was significantly complicated by the fact that prior to Vladimir Putin’s launching the Second Chechen War, there were no favored figures within the president’s retinue or in high government posts. The “patriotic” path breaker in the wider arena of Russian politics was the KGB protégé Vladimir Zhirinovsky, founder of the grossly misnamed Liberal Democratic Party. Putin, who was much more cunning, followed the path blazed by the flamboyant Zhirinovsky and Gen. Alexander Lebed, who had run for president in 1996. Putin himself practically gushed an ostentatious form of “patriotism.”

  The victory in the 1999 parliamentary elections of a newborn movement whose only slogan was unconditional support for Vladimir Putin, and his victory in the presidential election of 2000, sounded the death knell of democracy. The persons who came to power were irreconcilable enemies of democracy, human rights, and the application of humane principles to Russia’s domestic and foreign policies.

  Besieged, badly managed fortresses will fall, sometimes from the unwise expenditure of resources and from epidemics, filth, and other problems brought about by the siege. This can occur even if the siege exists only in the minds of the powers that be. Many of Russia’s problems were occasioned precisely by this imaginary siege. The country’s resources were wasted on senseless military pseudo reforms and on the appearance of supporting national security (a component of which was a “financial stability” that led to collapse) as viewed by the authorities rather than on constructing a space within the country in which one could live normally.

  It is difficult to imagine another country where the leaders treated their people, their own earth, and their own natural wealth in such a barbarous fashion.

  The destruction of a people is senseless and pointless as well as an extremely rare event in world history. It is usually associated with tyrants such as Adolf Hitler, Stalin, or Pol Pot. What occurred first in the USSR and then in Russia is so senseless and so protracted that it constitutes one of the greatest puzzles in history. Russia’s tragedy reflects the inherently odious features of Russian power, power that is burdened by the vices of stunted intellectual and moral development and is confident of its absoluteness and its impunity. The crimes that brought Russia to the blind alley in which it found itself in the year 2000 were committed by very different kinds of persons, from orthodox communists to the quasi-democrats under the early Yeltsin. These leaders were responsible for Russia’s degradation at the time Boris Yeltsin betrayed democracy by handing the reins of power to his appointed successor, Vladimir Putin.

  4

  How the System Really Works

  The core of the enigmatic Russian soul sometimes appears to be located in the Kremlin. Of course, in Russia as elsewhere the real action of politics and diplomacy takes place behind closed doors, and the outcomes of the often painstaking and intensive struggles become known to the wider public as official foreign and domestic policy. The following anecdote from the early Yeltsin era, when there were very specific ways of doing things, affords a look behind those closed doors. It was a time when incompetence, irresponsibility, seeking personal advantages, and drunkenness on the job, especially in the Kremlin, were typical features of working life. They surprised nobody. This episode speaks to the level of qualifications of one high-level Kremlin official—Sergei Prikhodko—and, for that matter, almost all of the Kremlin administration.

  Once, when I was filling in for my boss, who was away on assignment, I had to reach an agreement urgently on some question with Sergei Prikhodko, Yeltsin’s assistant and chief of his foreign policy staff. (In May 2013 he became the vice premier and head of the government bureaucracy.) Someone who was very close to Prikhodko worked in our department at the time, so I requested that he stop a government official who, for unknown reasons, was doing his best to block all our initiatives regarding the matter in q
uestion, the nature of which is not relevant here.

  “Andrei, I simply can’t!” my colleague literally howled.

  I replied that it was absolutely imperative, explained to him why, and asked him why he sounded so despairing. I was dismayed by his answer.

  “You know, when I go to see Sergei Eduardovich [Prikhodko], I take two bottles of whiskey with me. I drink the first bottle with his assistants. The second with him. And today I’ve already been there twice! Do you really want me to go there again?”

  All I could say was, “I’m sorry. It has to be done. There’s no other way.”

  “Well, then I won’t come back to work today,” he said hopelessly.

  “Okay, if anyone asks, I’ll say you’re in the Kremlin. But call me and let me know how it went.”

  “I won’t be able to,” he shook his head despairingly. “You’ll know the results tomorrow, okay?”

  “The boss wants it today.”

  “Then you can say right away that Prikhodko agrees.”

  “Really?”

  “I always keep my word, as you know . . . although perhaps I need to take another bottle as a guarantee.”

  As this anecdote suggests, after the August 1991 coup, Russia’s government and diplomatic service began to disintegrate. During the acute political struggles between reformers and reactionaries preceding the coup, a paradoxical alliance had formed between the hard-line communists and many democrats. The former rejected the reforms outright, while the latter were dissatisfied with the depth and speed of progress. In the run-up to the coup, the CPSU and the KGB closely cooperated in redistributing property and forming a new elite. If one accepts this as a fact, and I do, it is logical to suppose that after the breakup of the USSR this cooperation continued in one form or another. The catastrophic results of Russia’s “liberal” economic reforms indirectly confirm this.