Encyclopedia of Russian History

by James Millar

  ALISON ROWLEY

  GKOS

  GKOs, Gosudarstvennye Kratkosrochnye Obyazatel-stva, are short-term ruble-denominated treasury bills issued since 1993. They played a major role in Russia’s August 1998 economic crisis.

  In the 1990s Russia was unable to balance its budget. The general government budget deficit

  GLASNOST

  varied from 5 to as much as 25 percent of GDP without any declining trend. First the deficit was covered by money emission, which contributed to very high and variable inflation. The Russian government started in May 1993 to issue short-term zero-coupon bonds known as GKOs. This was meant as a non-inflationary method of financing the deficit. The GKO maturity is less than a year. Sometimes the average maturity has been as short as half a year. There are also ruble-denominated medium-term federal bonds known as OFZs (since 1995). Other government debt instruments were also issued, but GKOs remained the most important ones.

  Russian inflation came down after 1995. The root problem, the budget deficit, was not addressed. It was believed that deficits could be financed by increasing debt. The government debt market was the fastest-growing market in 1996 and 1997. Domestic ruble-denominated debt remained very small until 1996 but rose to 13 percent of GDP in January 1997. This is still not an internationally high figure. But the high yields, short maturities, and large foreign ownership shares of GKOs made the situation explosive.

  The GKO real interest rates were first highly negative due to unexpectedly high inflation. As inflation subsided but GKO nominal yields remained high-due to high inflation expectations, political uncertainty or other reasons-real interest rates shot up. They were 30-60 percent in 1996-1997. Later they decreased, only to reach new highs in early 1998, as the danger of default became evident. Interest payments rose to 27.6 percent of federal government revenue in 1995 and more than half in early 1998. Most GKOs were consequently issued to service earlier debt. By 1997 the GKO contribution to financing the deficit was actually negative. On the other hand, they had become the main revenue source for the larger Russian banks.

  Access for foreigners to the GKO market was quite restricted until 1996. Due to the small size of the market relative to international capital flows and very high real interest rates, access was only liberalized gradually. Measures were used to keep the non-residents’ earnings within limits. Still, by the end of 1997 their share in GKO stock was at least a third, perhaps more. The rest was basically owned by the Central Bank and the state-owned Sberbank. The risk of sudden exit of nonresident GKO holders was real. Nonresident behavior soon became a major source of the GKO market crisis in the spring of 1998. After the crisis of August 1998, the government chose to restructure the GKOs and OFZs, which were to a large part frozen. Afterward, Russian government debt market has remained quite illiquid. With budget surpluses, the government has not needed new debt. Investors remain wary. GKO stock is less than 1 percent of GDP. However, debt instruments would be useful for liquidity control and protection from inflation. See also: ECONOMY, POST-SOVIET; SBERBANK

  BIBLIOGRAPHY

  Gobbin, Niko, and Merleverde, Bruno. (2000). “The Russian Crisis: A Debt Perspective.” Post-Communist Economies 12(2):141-163. Malleret, Thierry, Orlova, Natalia, and Romanov, Vladimir. (1999). “What Loaded and Triggered the Russian Crisis?” Post-Soviet Affairs 15(2):107-129. Willer, Dirk. (2001). “Financial Markets.” In Russia’s Post-Communist Economy, eds. Brigitte Granville and Peter Oppenheimer. Oxford: Oxford University Press.

  PEKKA SUTELA

  GLASNOST

  Glasnost is a Russian word that proved fateful for the Soviet communist empire in its last years of existence. Variously translated as “openness,” “transparency,” or “publicity,” its root sense is public voice or speech. Freedom of speech is a close Western equivalent.

  Upon his rise to power in 1985 as General Secretary of the Communist Party of the Soviet Union, Mikhail Gorbachev introduced glasnost as one of a troika of slogans in his campaign to reform a faltering Soviet system. He called for glas-nost (openness) in public discussion, perestroika (restructuring) in the economy and political system, and novoye mneniya (new thinking) in foreign policy. All three slogans broke away from the ideology-laden sloganeering of past Soviet leaders and suggested movement away from dictatorship to a more open and democratic Soviet future.

  While Gorbachev made perestroika the troika’s centerpiece, glasnost was the most potent in bringing new political forces and formerly silenced voices onto the political stage. The notion of a public voice distinct from the ruling power and the idea of open

  GLASNOST

  public debate ran hard against the Soviet ideological system.

  Before Gorbachev, the regime recognized no public voice beyond the voice of the nomenklatura, the Communist Party hierarchy, speaking to its subjects through state-controlled media. All non-political, literary, academic, and scientific publication was subject to the strictures of the party line and censorship.

  Glasnost made its initial and unofficial appearance during the rule of Leonid Brezhnev, Gorbachev’s predecessor. A small but vocal dissident movement (also known as the Democratic Movement) broke through the regime’s facade of ideological conformity. It produced an underground press, samizdat (lit. self-publishing), which gave voice to a wide range of opinion and criticism at odds with the official line. A notable moment in samizdat came when Andrei Sakharov, the famed Soviet nuclear physicist and advocate of civil and democratic rights, published an unauthorized essay in 1968. He appealed to the top leaders to move toward glasnost and democracy as the path toward overcoming the country’s urgent problems. Entitled Progress, Coexistence and Intellectual Freedom, the essay, written in typescript, circulated widely inside the USSR and was smuggled to the West. Sakharov’s outspokenness led the Brezhnev regime to exile him in 1980 to the closed city Gorky, far from Moscow and Western media sources. In a symbolic gesture of his glasnost policy, Gorbachev freed Sakharov from exile six years later and allowed him to return to Moscow.

  Though Sakharov’s essay may well have influenced Gorbachev, Gorbachev’s version of glasnost was limited and aimed at a controlled change and liberalizing reform of the Soviet system without destroying its foundations. Yet, despite his effort to keep glasnost within manageable limits, it opened the door ever wider to an intensifying and searching public debate challenging the Soviet order itself. Newspapers, journals, once-banned books, and revelations from archives appeared and found appreciative audiences. Glasnost as transparency brought to light what the regime had hidden. Revelation upon revelation of its record of mass repressions, abuses, lies, and corruption were publicized, deepening its disrepute among the public at large. Glas-nost also gave voice to long-suppressed national independence movements within the empire, which contributed to its disintegration. Defenders of the old order warned Gorbachev that glasnost was a “two-edged sword” that could turn against its user. Yegor Ligachev, a fellow member of the Politburo, aimed a barb at Gorbachev that it was not wise to enter a room if you do not know the way out. And, in fact, the explosion of the nuclear reactor in Chernobyl, Ukraine, severely tested Gorbachev’s commitment to glasnost.

  Gorbachev’s glasnost policy was a major factor precipitating and informing the political struggle developing in the leadership in the latter half of the 1980’s and culminating in the coup of August 1991. The struggle began in earnest in the fall of 1987 with a split inside the ruling Politburo. Yegor Ligachev, former ally of Gorbachev, became his adversary on the right. Boris Yeltsin became his rival in the cause of reform on the left. Second in command in the Politburo, Ligachev defended the interests of the nomenklatura against Gorbachev’s reforms. Yeltsin, who entered the Politburo under Gorbachev’s patronage from provincial Sverdlovsk, pressed for a faster pace of reform than Gorbachev was then ready to promote. At a Central Committee meeting in October 1987, Yeltsin attacked Ligachev for sabotaging his reform efforts as Moscow party chief and accused Gorbachev of foot-dragging on perestroi
ka. The upshot was Yeltsin’s ouster from the Politburo and then as Moscow party secretary. His fall was a blessing in disguise for Yeltsin and freed him subsequently to rise as a popular leader untainted by association with the ruling group.

  Despite his effort to control glasnost, Gorbachev soon found himself driven to more radical measures by the dynamic of the new political world that glasnost was bringing into play. First he proposed at a party plenum in January 1987 that party leaders be elected from below instead of by cooptation from above. He ran into a wall of resistance from local and regional party secretaries who feared losing power. He then turned to shifting his own base of power from the party to a new parliamentary body with constitutional powers beyond the reach of party control. In March 1989 he realized his project. A Congress of Peoples Deputies was instituted with two-thirds of its deputies popularly elected and a third selected from party and other official organizations. The Congress became a platform of open public debate televised to the whole country. Andrei Sakharov led the democratic grouping (Interregional Group) in opposition to the party nomenklatura. Sakharov lent his great prestige and the fire of his moral passion to the sharp and open debate in the body (often to GorGLASNOST bachev’s irritation as the presider) and galvanized public opinion against Communist Party abuses. Though conservative party elements held a large majority in the Congress, they found themselves on the defensive in the face of withering criticism from the Sakharov-led opposition. Glasnost was winning the day, but Gorbachev’s grip on public debate and democratic reform began to slip. The introduction of popular elections was reversing the political thrust in the heart of the Soviet system. Power from above was increasingly challenged by power coming from below.

  Yeltsin lost no time in using the electoral process Gorbachev brought into being. In Moscow he won a seat in the Congress by landslide, and after Sakharov’s death in December, he assumed Sakharov’s place as leader of the democratic faction. He also won a seat in the parliament of the Russian Federation, the body that elected Yeltsin its president in May 1990. At his initiative the Russian presidency was made into a national elective office, and in June 1991 he handily won that office in a national election, becoming the first Russian leader so chosen. Yeltsin became a powerful challenger to Gorbachev and to the Soviet system itself. Glasnost and democratic reform were no longer Gorbachev’s preserve. What formerly had been a mere facade of Russian self-government now became a second center of authority in the land.

  As rivalry between Gorbachev and Yeltsin unfolded, conservative elements inside the party were marshaling their forces to challenge Gorbachev and suppress glasnost and the democratic movement. Gorbachev now walked a tightrope between right-wing forces and the Yeltsin-led forces on the left. Gorbachev’s effort to shore up his presidential powers and build his base in the Congress of Peoples Deputies and its Supreme Soviet was ineffectual. His popularity plummeted as Yeltsin’s soared.

  Leaders of the party’s old guard finally struck in August 1991. They sought to employ all the Soviet agencies of repression against the developing democratic and national revolution. They organized an emergency committee, seized power in its name, declared martial law, sent an armada of tanks into Moscow, and put Gorbachev under house arrest in his vacation dacha in the Crimea. Yeltsin defied the perpetrators of the coup from atop a tank in front of the White House (the Russian parliament building), drawing a mass of supporters around him. The standoff ended when the military and special forces refused the emergency committee’s orders to crush the opposition. The Russian democratic and national revolution under Boris Yeltsin’s lead dissolved the emergency committee, arresting its members and the coup participants. The Russian Federation assumed full authority in its territories, abolished the Soviet Communist Party, and ushered the Soviet Union out of existence at the end of the year. The principal nations that had been subjected to the Soviet empire gained their independence. Gorbachev became a private citizen, and his rival, Yeltsin, went on to lead the resurrected Russian republic.

  Before his death in December 1989, Sakharov, in a private encounter with Gorbachev, forewarned him that if he continued to seek unlimited power without standing for election, he would one day find himself without public support in a leadership crisis. Gorbachev was unwilling or unable to act on the clear implication that glasnost posed for his leadership, namely, that democratic legitimacy could only be secured through a process of public debate and popular election.

  Though this was not his intention, Gorbachev paved the way for Russia’s historical return as a nation-state and in the form of a democratic republic. His taking up of the cause of glasnost led to a renaissance of Russian intellectual and political life. Despite instability and a perilous transition from Soviet despotism to a fledgling republic, glas-nost continued to be the rule in the new Russia’s first decade, in the provisions of its new constitution, the existence of free public debate, and a series of orderly and reasonably fair parliamentary and presidential elections. Whether the spirit of glasnost prevails or wanes in the post-Yeltsin era was yet to be determined as the reborn Russia entered the twenty-first century. One thing was clear: glasnost would go down in the annals of Russian history as the potent word that brought down an empire. See also: AUGUST 1991 PUTSCH; GORBACHEV, MIKHAIL SERGEYEVICH; LIGACHEV, YEGOR KUZMICH; PERE-STROIKA; SAKHAROV, ANDREI DMITRIEVICH; SAMIZ-DAT; YELTSIN, BORIS NIKOLAYEVICH

  BIBLIOGRAPHY

  Gorbachev, Mikhail S. (1995). Memoirs: Mikhail Gorbachev. New York: Doubleday. Gwertzman, B., and Kaufman, Michael T., eds. (1990, 1991). The Collapse of Communism. New York: Times Books.

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  GLAVKI

  Kaiser, Robert G. (1991). Why Gorbachev Happened. New York: Simon and Shuster. Linden, Carl. (1997). “Gorbachev and the Fall of the Marxian Prince in Europe and Russia.” In Russia and China on the Eve of a New Millennium, eds. Carl Linden and Jan S. Prybyla. New Brunswick, NJ: Transaction Publishers. Tarasulo, Isaac J., ed. (1989). Gorbachev and Glasnost: Viewpoints from the Soviet Press. Wilmington, DE: Scholarly Resources Inc. Walker, Rachael. (1993) Six Years that Shook the World: Perestroika, the Impossible Project. Manchester, UK: Manchester University Press.

  CARL A. LINDEN

  GLAVKI

  Plural, short for glavnoye upravlenie, or chief administration.

  Glavki are subordinate administrative units or departments of Soviet state planning and existed in economic, military, and cultural ministries, such as tourism. In the economy these subdivisions of central or local industrial ministries dealt with specific industrial branches in formulating and administering the annual and perspective plans.

  These departments appeared originally as parts of the Supreme Council of National Economy (VSNKh or Vesenkha) controlling particular sectors, such as the match, soap, oil, and timber industries (Glavspichki, Tsentromylo, Glavneft, Glovles, and so forth). They replaced the corresponding People’s Commissariats by early 1918. During the civil war period, the glavki controlled distribution of scarce materials and ordered new production of items for war, subject to interference from the Party’s Politburo and without a national plan, wages, or bookkeeping. By 1921 this had become a bureaucratic chaos (called glavkism). Nevertheless, these units survived reorganizations during the New Economic Policy of the 1920s and thereafter, emerging once again in 1931. Now under the commissariats (called ministries after 1946) and Gosplan in the Stalinist planning period, they acquired direct power over their subordinate enterprises until Nikita Khrushchev’s reorganization in 1957.

  As a result of subdivisions, some glavki became new ministries, whose number in the industrial and construction branches alone reached thirty-three in 1946 and 1947, but about a year later the number was again reduced by unification. For instance, the Ministry of Textiles sometimes reverted to a chief administration within the Ministry of Light Industry, or the reverse. These continual organizational changes had questionable practical effect. Some of these glavki-such as those for finance or labor-were responsible for functiona
l administration, and some were specialized subdivisions, such as the glavki for woolens in the Ministry of Textiles. Enterprises received their plans from the chief administration, usually in Moscow, and submitted their requirements to it. So-called funded inputs, which were especially scarce, were allocated to enterprises by the glavki, which set up their own supply arrangements to make sure their firms met the planned targets. They set up workshops to produce spare parts on an inefficiently small scale, a practice that also led to duplication. The chiefs of these chief administrations, usually called Deputy Ministers, became nonpolitical technical specialists, like most of the ministers over them, subject only to occasional intervention from party officials in the Kremlin. Their incentives were linked informally to the success of the enterprises under them, but not necessarily their profit or productivity. Accordingly, they could be relied on to support enterprises’ requests for more investments and supplies and easier plans, even when they knew higher productivity would be possible. Sometimes they reallocated profits among their subordinated enterprises to allow all of them to meet their financial obligations. Even during the regional reorganization instituted by Khrushchev, the more important allocation decisions were made in the republican or sectoral glavki of the all-Union Gossnab (supply agency) in Moscow. This was necessary to prevent “localism,” a preference for enterprises within one’s region over the needs of enterprises elsewhere. See also: GOSPLAN; INDUSTRIALIZATION, SOVIET