Yeltsin versus the offer their retired workers extra benefits can no longer afford to do so. Once they start closing and shedding their workforce, it will also become very difficult for pensioners to supplement their income by continuing to work, a widespread practise in the past. There is also evidence that even the legal minimum wage is not being respected.7
IN a previous article we examined the goals behind the neo-liberal reforms that began in Russia on January 2 with the partial freeing of prices. That analysis concluded that the declared aim of "Western-style prosperity" is unattainable within any politically reasonable time and is merely a screen for a rather different, political, objective:
the accelerated formation and political consolidation of a capitalist class, a crucial condition of the "revolution from above".
In this article we will look at the economic impact of the reform on the population and the reactions to it.
Throughout, the limited nature of the information available should be kept in mind.
DAVID MANDEL
HE price liberalization, which,
T according to independent estimates, led to retail price rises of up to 500-700% in January dealt a severe blow to already declining living standards. Moreover, people in the former
Soviet Union could not even enjoy the psychological consolation available two years before to the Poles, who could see their shops fill up with goods, even if at largely unaffordable prices. In Russia, on the contrary, there has been no appreciable overall increase in the assortment or quantity of goods for sale (milk, previously available in Moscow, has become very hard to find, and in many cities there are long lines even for bread).
This has led miners and other groups of workers to demand that part of their wages be paid directly in food products.
Moreover, the price rise has been accompanied by a decline in the quality of services and goods. For example, complaints about railway services rose markedly2 while there has been a serious increase in the quantity of spoiled or contaminated food offered for sale.3
At the same time, the impact of the blow to living standards has been uneven.
By far the hardest hit are the millions of people on fixed incomes (pensions, stipends, social allocations) as well as state employees paid directly from government budgets such as teachers, health personnel, workers in communal services and so on. Though Yeltsin had promised during his election campaign that no one would
8 suffer, the government made clear before
International Viewpoint # 226
April 13, 1992 the reform that it would support only the "least defended" strata of the population. In fact, it is now widely recognized that even this minimal social protection was not in place at the time prices were freed.4
Nor was this an oversight on the part of a harassed government. The policy is clearly for incomes to fall behind the rise in the cost of living as much as is politically feasible; to concede only what is absolutely necessary to maintain political stability. Wages of state employees were raised 90% on the eve of the reform, but even official figures put the price rise in January at up to 350%. Similarly, the minimum wage and pension were doubled to 42 roubles, student stipends to 270, again well below the rise in prices.S One third of the minimum monthly wage will buy a kilogramme of low quality
Displaying its "courage" to its International Monetary Fund (IMF) patrons, the government is not daunted even by the threat this poses to the very physical survival of whole sections of the population. The daily caloric intake of 75 million people in Russia is 25% below the medical norm, to say nothing of the nutritive quality of the other 75%. According to the Centre for Gerontology of the Russian Medical University, a balanced daily diet of 2000 grams for an elderly, non-working person costs 500-600 roubles a month, that is, about 50% more than the minimum pension, and this does not include other basic living expenses. 6
Meanwhile, enterprises that used to
Wages in state enterprises, which employ the overwhelming majority of the workforce, are no longer regulated by the state. Though the government obviously wants to keep these down also, it would be too dangerous politically to do this by decree. The idea is to achieve this indirectly, through "economic" means, by cutting subsidies and easy credits, thus exposing enterprises to "strict budget constraints", or, more precisely, to the
A basic goal of the price liberalization is to depoliticize wage demands, deflecting them from the state to the enterprise administrations. The latter have been responding by raising prices, but there are limits to this if the goods are to find buyers. And the government has declared that it is prepared "if necessary" to introduce a tax on "excessive" enterprise wage bills.& Whether it will be able to impose such a measure is another
Uneven impact of price rises
Thus, although the overall situation of the workers in the state enterprises has deteriorated, the impact of the price liberalization has been quite uneven, a factor that has muted the political protest. The degree to which different groups of workers have been able to defend their living standards depends on many factors, in particular their level of organization, their militancy, the economic importance of their sector, and the ability of the enterprise administration to raise prices and to barter its output for consumer goods.
The coal miners, the most organized and militant sector of the working class, have been best able to more or less maintain their living standards through strikes and the threat of strikes. Doctors and teachers (among the lowest paid workers to start with), pilots, air dispatchers, oilworkers, metro construction workers, bus drivers and many others have resorted to 1. Trud, March 6, 1992. 2. Ibid., January 9, 1992. 3. Ibid., February 26, 1992. 4. Ibid., February 26, 1992; Nezavisimaya gazeta (NG), March 13, 1992. 5. NG, January 16, 1992; Financial Times (FT), January 3, 1992. 6. Trud, March 3 and 6, 1992. 7. La presse (Montreal), March 3, 1992. 8. Interfax, March 1, 1992 cited in Foreign Broadcast Information Service, Daily Report on Eurasia (FBIS), March 3, 1992, p. 49.
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CIS people
"So where were you when everything was being strikes or threats of strikes that have met with varying degrees of success. Many of these have been local actions, but others have occurred on a city (for example, the Petersburg teachers) regional (miners) and even republican level (medical per-
CIS privatized?" sonnel). In March, threats of general regional strikes have arisen in the Murmansk and Kemerovo regions.
Spontaneous protests in different towns forced local authorities to take measures such as increasing price subsidies and maintaining or introducing rationing. In Kazakhstan, for example, the government was forced to lower prices in January after the miners' struck.® In the Ukraine, measures of "social protection" — minimum wage and pensions, price controls and subsidies on basic goods — are considerably higher than in Russia, by far the most zealous IMF disciple in the former Soviet Union.
It is, therefore, impossible to give an overall picture of living standards today. The head of the Moscow Federation of Trade Unions stated in mid-March that from Izvestiya, 11/12/91 the average wage in Moscow had risen three times since January 2, but prices had risen up to ten times. ° Besides wage rises, a number of other factors have cushioned the impact of the price rises. Subsidized sale of consumer goods
Most important among these is the widespread practice in enterprises of the subsidized sale of consumer goods, a practise that has developed in proportion to the rise in prices.!!
But though virtually all kinds of enterprises and institutions engage in this practice, its extent depends on the enterprise's connections and especially on what it produces. Particularly privileged are enterprises that can earn foreign currency. Oil and coal workers, for example, have demanded and won the right to freely trade a percentage of their output. Many enterprises are also subsidizing their cafeterias to compensate for price rises there.
It should also be noted that in the months before the price liberalization it had become increasingly difficult to buy even many of the most basic goods in the state stores at controlled prices (which were steadily rising). To the extent that their budgets allowed it, people were already being forced more and more to turn to the "free" market. In addition, some households had stored up considerable amounts of food.
These are some of the reasons why the much feared "social explosion" has not occurred. However, as we shall see, a much more serious political test for the neo-liberal reformers is fast approaching as prices of energy resources are about to be freed and the vast arms industry runs out of money to pay its workers. Nevertheless, the population has not been passive in its response to the "shock therapy"
This reform has been introduced basically by executive decree, without any democratic discussion or decision. None of the election campaigns, neither to the Russian Supreme Soviet nor to the presidency, were conducted around the government's present programme. Indeed, the promises made in relation to the market during those campaigns were quite the opposite of what today is occurring. Electoral programmes made no reference to mass impoverishment and to the accelerated accumulation by a small minority of vast wealth and power through speculation and corruption, including the massive direct theft of the nation's property. Majority against market reform
For all their bias and lack of rigour, opinion polls in the press, which overwhelmingly supports Yeltsin, confirm that the majority of the population do not support the reform. Thus a St. Petersburg survey in the first half of January found that 50% disagreed with the claim that freeing prices would help end the crisis, while only 28% felt the measure was positive and necessary (22% had no opinion). 12 A poll at the end of January in all of Russia found that 45% believed that only state control of prices and of distribution of goods and resources can save the economy, while 36% felt that free enterprise was the only way out (20% gave no ans-
A poll conducted at the same time in Moscow found a similar division of opinion as to whether the present government could resolve the present crisis. 14 In a mid-February survey in Moscow, Petersburg and Samara, 53, 35 and 40% respectively did not believe that this government could resolve the crisis while 26, 22 and 16% did. These figures were remarkably stable across socio-economic groups. 18 In Kazakhstan, opinion was even firmer: in the fourth week of January, 60% strongly opposed the freeing of prices. 16 The percentage of those who oppose the reform can only grow in the coming weeks and months as the situation, by the government's own predictions, continues to deteriorate.
The freeing of prices gave rise to a large number of spontaneous, local protests across the former Soviet Union. These ranged from strikes, demonstrations and boycotts to smashing shop windows, sacking stores and blocking traffic. They were able to force minor concessions from local authorities, but the only major retreat in central policy was the cut in VAT on some foods, from 38 to
Organized political protests have so far mainly been led by what can be called the conservative ("communist") opposition, 9. NG, January 14, 1992. 10. Trud, March 16, 1992. 11. NG, January 22, 1992. 12. NG, January 22, 1992. 13. Interfax, January 29, 1992 in FBIS, January 29, 1992, p. 35. 14. Rossiskaya gazeta, January 1, 1992. 15. NG, February 14, 1992 16. See /V no. 215. 9 17. FT, January 14, 1992. April 13, 1992 • # 226 International Viewpoint
International Viewpoint # 226 • April 13, 1992
CIS who are usually joined by the nationalists. These have attracted quite large crowds in Moscow (over 50,000 on February 9, and around 70,000 on March 17 — the largest so far). A good part of these crowds are neither conservatives nor nationalists but people seeking to protest against the government's anti-popular policies who have no other outlet, given the activity of the (official) trade unions and the left. However, the social base of the conservatives and nationalists themselves is limited and with no immediate perspective of significant growth, though this could change in the future as the overall situaConjuring up the "red-brown
The government and the liberal press have consistently exaggerated the streng th of the so-called "red-brown" menace, probably to prepare the ground for more authoritarian measures against future popular protests. Moscow's mayor Gavril Popov has repeatedly made clear that the basic threat to "democracy" is its tolerance of "extremism" and that he personally would have had no trouble dispersing the February 23 conservative demonstration, though parliament baulked at this.
As for the pensioned general who died of a heart attack in a verbal scuffle with police during that demonstration, according to Popov he was no war veteran but a KGB general. Presumably he deserved what he got. 18 The Moscow government initially forebade the March 17 demonstration, claiming that it planned to call for the overthrow of the government. Indeed, Moscow authorities decided to ban all demonstrations during the transitional reform period, but were ultimately forced to retreat. ° Not long ago, before he became one of the most powerful and richest men in Moscow, Popov himself had led demonstrations in defiance of official bans. Student protests in Tashkent
The most significant political actions not organized by the conservative forces were the demonstrations by university students in Tashkent, the capital of Uzbekistan, which began on January 16 as a protest against the price rises and the absence of bread. Demonstrators called for the resignation of President Karimov, whose regime is probably the most authoritarian and least reformed of all the former Soviet republics.
Some ten thousand students were marching to the city centre when government forces opened fire on them, killing seven and wounding many others. The government described the demonstrators as "destructive conservative forces" but, in fact, the students had links with the democratic movement in Uzbekistan. Government forces cordoned off the students' village, broke into dormitories and permanently deported to their home towns some 3,000 students who were non-natives of the
The left, at least in Moscow and St. Petersburg, has not organized any visible public protests against the shock therapy. A conference in early February in Moscow of supporters of the creation of a Party of Labour21 decided to call on people not to demonstrate on February 9, the day of simultaneous pro and antiYeltsin rallies. In its declaration, the meeting recognized the legitimacy of the people's desire to protest against the government's policies but warned that the demonstrators would be pawns in "someone's dirty game". A newspaper report stated that the Moscow activists were in a state of indecision, caught between the need to protest and the fact that their potential social base is still silent.22 As noted, however, a large part of those who demonstrate in the conservative rallies are ordinary citizens who support democracy.
Roy Medvedev's Socialist Workers Party, created last fall by members of the banned Communist Party, and, by Medvedev's own admission, with few workers among its claimed 50,000 membership, has its own economic programme which is in conflict with the government's, yet it has not called for the government's resignation. 23
Union pact with government
According to newspaper reports, the Moscow Federation of Trade Unions, which has been supporting the initiative for a Party of Labour, concluded an agreement with the Moscow government at the end of January on measures for the "social defence" of the capital's citizens. Details were sketchy, but the agreement is said to provide, among other things, for maintenance of living standards and labour and environmental protection
The city government is to publish figures on the minimum consumer budget every three months and index incomes from the city budgets. It will also take other measures to provide basic goods. In return, the trade unions are to refrain from striking.24 The promises on the government side seem quite unrealistic and so far, at least, are not being respected. The Federation's commitment not to strike, on the other hand, may explain why it has done nothing to mobilize protest, but it hardly has the means to prevent Moscow's work collectives from striking.
Other regional unions and union federations, however, appeared to be mobilizing the people."
their members to press demands on the central government. In the Kemerovo region of the Kuzbass, a coordinating committee of strike committees and the head of the (official) trade unions had set a general regional strike for March 10, in view of the central government's refusal to send a delegation to the region for talks. The basic demands concerned the supply of goods and currency to the region, as well as wages.A strike threat 18. NG, March 14, 1992. 19. TASS, February 4, 1992, in FBIS, February 4, 1992, p. 55. 20. Interfax, January 18, 1992, in FBIS, January 21, 1992, p. 86; New York Times, January 20, 1992. 21. (See earlier issues of /V). 22. NG, February 4, 1992. 23. TASS, January 23, 1992, in FBIS, January 27, 1992, p. 27; Sovetskaya Rossiya, January 28, 1992. 24. TASS, January 24, 1992, in FBIS, January 28, 1992, p. 37.
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...and I've privatized 10
April 13, 1992 C had earlier won the miners a tripling of their wages and other groups, particularly railroad, post and telecommunications workers, teachers, bus drivers and trade workers, wanted the same.
It should be noted that the chairman of the regional soviet, A. Tuleev, who ran against Yeltsin in the presidential elections in 1990 and received an absolute majority in the region, had earlier tendered his resignation, saying that he could not "accept the programme, forms and methods of economic policy of the Russian leadership that lead to the immiseration of the people of the Kuzbass."25 The soviet refused to accept the resigna-
On the other hand, the Kuzbass Workers Committee, which traces its origins to the
July 1989 strike, has called the strike threat a "revanchist"
action by the old nomenklatura. It is not clear what the position of the Independent
Miners Union (IMU) is, though in its statement the Kuzbass Workers Committee indirectly criticized it for demanding too high wages that threaten the reform.
The strike call was suspended on
March 7, when the government announced it was sending a commission to resolve the conflict.26 At the end of January, the Petersburg Federation of Trade
Unions was also calling for a warning strike to demand the government lower the VAT and fine traders who exceed the official price limits, but the strike does not seem to have occurred.27
A similar threat of a regional general strike, discussed at a special session of the regional soviet on March 3 with representatives of the trade unions, enterprise managers and various political parties, arose in the northerly Murmansk region after the government refused requests by representatives of the regional government for allocations and other economic aid.
The solidarity displayed between enterprise directors, political authorities and trade unions prompted the liberal paper,
Nezavisimaya gazeta, to term the proposed action a "directors' strike" 28 But although the movement's demands are limited to the region and, in that sense are corporatist, there is nothing in principle corrupt about such a coalition as long as the unions maintain their independence.
Indeed, this is probably the dominant form conflicts related to the "shock therapy" take today throughout the former
Soviet Union.
"I'm getting used to market conditions" Union subservience to management
The problem is that it is far from clear that the unions involved are really independent. At the enterprise level, most (former official) unions are still "pocket unions" subservient to management. But there is evidence of strong local dissatisfaction with the passivity and often blatantly conciliationist policy of the higher trade union apparatuses towards the state.
For example, a letter signed by the captain, his first mate and the chairman of the trade union committee of a fishing trawler in Murmansk harshly attacked the government's policy which has impoverished the owners and pays only lip service to social protection, while in fact it is "defence of the money bags". The trade unions are inactive, "playing some sort of irresponsible game" 29 In the Ukraine, the Metallurgical Workers Union is pressing for new elections to the council of the republican union federation. It claims that its passivity has created a situation where the politicians treat the trade unions on the same footing as a "philatelic society of rabbit breeders' association" 30
The head of the Federation of Independent (former official) Trade Unions of Russia (FNPR), Klochkov, announced a four month moratorium on strikes on the eve of the "shock therapy" 31 He stated that this was part of a three-way agreement being worked out by government, business circles and the trade unions. This was rather strange for several reasons. In the first place, the agreement had not yet
CIS been concluded - and three weeks later the FNPR complained in a letter to Yeltsin that the government was ignoring calls for social partnership. Yet it maintains its moratorium. 32
Moreover, the FNPR had absolutely no mandate to negotiate such an accord nor the power to enforce it. Finally, the presence of "business circles" adds a particularly bizarre touch, since virtually all of the FNPR's members work in state industries. It seems odd that the leader of a multi-million member union movement would be so eager to elevate to equal social partnership the admittedly fast growing, but still fledgling speculative and profoundly corrupt
"business circles"
Klochkov's answer to the letter from the Murmansk trawler is instructive. He told the local union members that they would have to fight for their own well-being. He noted that the
FNPR supports the reforms as "necessary and inevitable" and that workers have to accept the "tragic necessity" that all will be hurt and that they should not think they can protect their own sector. He did say that if the government did not carry out its promises (as it has already failed to do in the area of social protection), the
FNPR would organize mass action, up to and including "depriving the government of our confidence" 33 But somehow one feels that Yeltsin has not been losing much sleep over this threat.
Referring to the passivity of the FNPR apparatus, Moscow News has joked that
"it is holiday time in the school of communism" ("school of communism" was one of the functions Lenin attributed to the Soviet trade unions) and suggested that these people do not need the workers since the FNPR has a lot of real estate, including five-star hotels. 34
It is not immediately clear what role the official unions played in the strike committees that have been organized in
25. NG, February 7, 1992.
26. Trud, March 6 and 7, 1992; NG, March 7 and
11, 1992; FT, March 11, 1992.
27. Interfax, January 26, 1992, in FBIS, January 27,
1992, p. 50.
28. Trud, January 30, 1992.
29. Trud, January 9, 1992.
30. Ibid, February 16, 1992.
31. Radio Rossii, February 26, 1992, in FBIS,
February 27, 1992, p. 19.
32. NG, January 22, 1992.
33. Trud, January 30, 1992.
34. Moskovskie novosti, March 1, 1992, p. 9.
35. Moscow Radio, January 29, 1992, in FBIS,
January 29, 1992, p. 24.
11
36. FT, March 6, 1992.
International Viewpoint # 226 • April 13, 1992
CIS numerous economic mobilizations. Among the most important of these was the threatened republic-wide strike of health workers called for January 29 but suspended after Yeltsin promised major concessions. 35 A threatened strike in Tiumen, Russia's main oil-producing region, resulted in the government allowing the oil enterprises to sell 40% of their output on the free market.36
The most militant and successful in pressing economic demands since the "shock therapy" has been the IMU. In mid January, despite the absence of any planned united front, it seemed that miners' strikes would occur simultaneously in the three coal mining republics, Russia, Ukraine and Kazakhstan. Demands were for higher wages, for a share of the coal to be sold at free prices by the enterprises, for improvements in the supply of consumer goods and currency to pay wages, as well as the opening of negotiations with the state for a general collective agreement.
Strikes, however, occurred only in the Vorkuta and Karaganda regions. But everywhere the governments made major concessions to the miners, fearing that their strikes might act to spark off action by other workers.37
The miners have thus been forced to fight for wage increases (as well as for a direct share of production to be sold freely) despite the IMU's official position that the wage struggle is no longer the answer and that, in market conditions, the "time to ask the government for justice has passed". As A. Utkin, chairman of the inter-republican IMU stated at the union's first congress in December, the miners should fight for radical reforms that would allow them to independently dispose of the fruits of their labour. Meanwhile, the sale of coal abroad (more profitable than its sale within the ex-USSR) is causing a decline in the production in
Miners union denounced as egotistical
The miners' wage demands have led some some liberals to denounce the IMU as egotistical and undermining the market reform. 38 However, the programme adopted at the IMU congress, while affirming the need for the transition to the market, declared that "none of the governments has a programme that corresponds to the
Despite talk about the need to concentrate on reforming the economy, it is not really clear that the IMU leadership has a genuine political strategy for imposing a reform that would be in the workers' interests. Indeed this would require that it 12 break out of the confines of the mining
Conversations with miners' leaders in the fall seemed to indicate that they were indeed thinking in this direction, but apparently the congress did little to advance this goal. It is significant that the congress itself, which, despite delegates' protests, took place outside Moscow (with Utkin claiming that the situation there was too tense and the congress might be prevented) was virtually ignored by media and political authorities alike.39
In St. Petersburg, an independent union of teachers has been formed which has won the adherence of a significant part of the school and pre-school teaching staff. It has put forward demands for higher wages, against the closure of pre-school institutions, for increased subsidies, free meals for pupils and teachers and physical maintenance of schools. Against the categorical opposition of the official trade union, it was preparing for a strike in the second week of March. 40 Organization of independent trade unions is proceeding among taxi drivers, pilots, air controllers, railway, postal, textile and other workers, but their success has so far been limited and especially weak among industrial
There does not seem to have been any significant upsurge in conflicts around privatization since the beginning of the year, although "spontaneous" privatization by economic and government administrators has by no means stopped. The government's immediate plans are for a "small privatization", that is, of the service sector, small light industry enterprises and housing. It has clearly stopped its flirting with the Union of Work Collective Councils, whose leadership as late as its second congress last October still nurtured the illusion that the government would support its goal of transferring the enterprises to the work collectives. At best, the collectives will receive a minority of shares (in the hope of keeping them quiet) and these will not be held collectively but individually by employees.
But relatively few large collectives have so far had to directly confront the issue. There is no news of the Union's
On the other hand, in Lithuania, a republic-wide strike in February by employees of communal services against the "plunderous" character of the privatization of their enterprises ended in victory. 51% of the shares remain with the work collective.41 There have also been a growing number of cases reported in the press of conflicts between apartment dwellers and new or prospective owners who want to evict them. In a typical case in the centre of Moscow, the inhabitants set up barricades against private police sent by the new "cooperative" owners to evict them.
The defenders, who call themselves "the communards", have set up a defence fund. The vice-prefect of Moscow's central district has become famous for his statement that "the centre is not for poor people" 42
Liberal movement in deep
Shock therapy has left the liberal movement in profound crisis. Its fundamental problem is that its social base, limited to start with, has melted away, as shown by the thin attendance at its February 9 counter-rally in support of Yeltsin. Now that the "communist enemy" is gone, the liberals cannot bring out the crowds, all the more so as they themselves have, to a very large degree, assumed the vacant places left by the displaced Communists. On the other hand, now that the main leaders of the liberal movement are in power, they no longer feel they need that movement and have been ignoring it.
The main liberal organization, Democratic Russia, split at the plenum of its council of representatives in January. According to a leader of the majority faction, the minority consists of "extreme radicals" who are detached from reality. As opposed to the "moderate pragmatists" the "extreme radicals" wanted to keep a certain distance from the government. They also opposed the practice of government officials combining government and business activities and the widespread corruption that this makes possible.43
An indicator of the depths to which the movement has sunk was the absence of seven of the nine founders of the Movement for Democratic Reforms, another key liberal organization, from the February 29 session of its political council -the seven occupy high government positions. As for the two that came, Nikolai Petrakov and Arkadii Volsky, they left during the recess.44 However, before leaving, Petrakov, who heads the Institute of the Market, posed the question of demanding the government's resignation and subjected the government's economic programme to wholesale, scathing criti-
The past few weeks have seen the emergence of what might be termed a left 37. NG, January 18, 1992; Komsomolskaya pravda, January 14, 1992; Interfax, January 14, 1992, in FBIS, January 15, 1992, p. 72; RFE/RL Research Report, January 24, 1992, 26. 38. NG, March 4, 1992. 39. Informatsionnyi Bulleten, KAS-KOR, December 20, 1991, p. 1. 40. Nezavisimyi rabochii vestnik (Petersburg), nos. 3 and 4, 1992. 41. Ibid, no. 3. 42. Trud, February 22, 1992 and March 6, 1992. 43. NG, January 21, 1992. 44. Ibid, February 3, 1992. 45. V. Perlamutrov in Nedelya, no. 5, 1992 and Petrak et al. in NG. March 6. 1992.
April 13, 1992 • # 226 International Viewpoint liberal or social democratic opposition to the shock therapy among a part of the "leading" intellectuals, most notably from Petrakov's institute. 45 In a collective article published in Nezavisimaya gazeta on March 6, top researchers at that institute attacked the government's policies as "incompetent and dead end", as destroying the productive resources of the country, "unprecedented in their cruelty and irresponsibility", oriented to middle man capital and scorning the creative potential and interests of the majority of the population, involving "expropriation of the toilers" and as turning the country into "a supplier of cheap resources and fuel and exporter of capital".
Among other things they call for a fixed course for the rouble, strict control over exports, including the prohibition of private trade in fuel and resources, and, more generally, for the protection of the economy from the world market, strong state regulation of the economy, including of all prices, and the free transfer of the enterprise to the collectives (though the capital would be divided among
This was followed a few days later by an article by academician Georgyi Arbatov, who argued that the much acclaimed successes of the neo-liberal policies of the IMF and Chicago School were largely liamentary elections. Nevertheless, this marks a major split in the liberal movement that opens up an ideological space for socialists that did not exist before.
Further price rises planned
If the government continues on its IMFprescribed course, and there is no indication at present that it intends to do otherwise, much harsher blows to the population lie immediately ahead, as prices on energy resources and on all consumer goods, including bread and milk (excluding only rent, communal services and public transport) are freed in April. The freeing of the prices of so basic a resource as energy - some economists predict that oil prices will rise by at least 500 to 600% (the IMF recommended 10001,500%) — will entail price rises of nearly the same magnitude for almost all other
Major worker protest thus lies ahead. And the situation is very different from what it was in January, when people still had some supplies of food and when the
CIS will shut down at least 100 mines in the region, which can expect to fare much better than the Donbass and Vorkuta. In a declaration they state that free coal prices will be a catastrophe not only for the Kuzbass but for Russia" where a 60 million tonne shortfall is already expected this year. 50 Some economists predict that the cost of oil production will rise so much that output will decline unless industry receives new subsidies.51 Cries of alarm are coming out of the metallurgical industry whose production has been declining because of the shortage of raw materials, especially coal and metal, a good part of which is being shipped abroad.52
The vast military industry, which dominates such areas as the Urals, the Moscow region and Petersburg is on the verge of a disastrous cut in its work force. The government has reduced military procurements to 13% of last year's total, but conversion is proceeding with great difficulty. It seems that military enterprises have been able to pay wages so far this year largely thanks to bank loans. In Petersburg managers are warning of a major explosion of worker discontent unless the government gives them 2 billion roubles in March to pay wages. They were already heavily in debt to the banks for
"So this a myth. He accused the government of being secretive and undemocratic, cruel and subservient to the IMF.
According to Arbatov, the "pseudo-reforms" threatened to reduce Russian society "to an animal state in the Brave New World prepared by the economic reform of this cabinet... I do not believe that to radically correct our affairs we must first absolutely impoveriis the market"
February's wages. 53
Another issue which is bound to grow in importance as a source of conflict is privatization and corruption (the two go hand in hand). There is already a widespread perception that the "new" government structures are scarcely more democratic and certainly more corrupt than 311h the old, that the "democrats" in power are getting rich at the
From Pravda, January 4, 1992. sh and debase ourselves. I am certain there are other ways. But they must be stubbornly sought out, without putting excessive faith even in the most sympathetic of young people" (a reference to Yeltsin's cabinet).46
Of course, much more radical and systematic criticism has long been voiced by socialists, as well as by Tatyana Koryagina, a deputy in the defunct Supreme Soviet, who until recently was the only economist with critical views who has had any press exposure. But this is the first time that prominent intellectuals, previously closely associated with the liberal movement, have come out publicly and forcefully with so blanket a rejection of the government's course.
Moreover, they have done so almost immediately after the start of the shock therapy. Of course, none of them calls for Yeltsin's resignation or even for new parvery fact of a radical break with the past and the expectations it raised helped to mute the pain. Many more workers have also acquired experience of organization
But besides the new blow to real incomes, the freeing of oil and coal prices will lead to a further sharp decline in production and open the period of mass industrial unemployment. According to the Ministry of Labour, 70% of the unemployed will be women. There is even a saying now that unemployment has a woman's face" 48 Normal unemployment benefits are not to exceed 75% of the minimum wage, itself well below subsis-
Nor will the energy extractive industries be spared. Coal industry directors in the Kuzbass and official trade union leaders predict that inevitable competition people's expense. Major scandals involving billions of roubles have come to light over the past weeks. Curiously, this corruption is cited by one of Yeltsin's foreign advisors as a reason why radical deregulation is necessary.54
Shock therapy and the Yeltsin regime stand before their most critical political test. In the coming months the Yeltsin regime will either abandon its neo-liberal course or it will go. * 46. Ibid, March 13, 1992. 47. Trud, March 6, 1992. 48. NG, January 25, 1992. 49. Interfax, March 1, 1992, in FBIS, March 1, 1992, p. 48. 50. Ibid., March 3, 1992. 51. Ibid., March 6, 1992. 52. Ibid. 53. FT, March 11, 1992. 54. Ibid., March 6, 1992. 13