Commonwealth of Independent States (CIS). This article looks at the struggle over economic strategy; a later one will look at the role of Russia within the CIS.
POUL FUNDER LARSEN
HE only substantial promise that
T
Yeltsin was able to make the Russian people at the end of August, apart from the offer of a privatization voucher worth 10.000 roubles (nominally about $50), was that "the end of this year will be the most difficult period" - at least so far.2 Indeed the first eight-months of Gaidar's shock therapy have plunged the
Russian economy into a state of unprece-
According to official figures from the
State Committee for Statistics, production fell by 18% in the first half of 1992, but several independent experts give higher estimates. On top of the falls of previous years, there has been a drop in production of as much as 50% since 1989. This fall is not likely to stop since investment fell by
46% in the first six months of 1992.
Inflation is estimated at between 1.600 and 3,000% by the end of the year, while the rouble has collapsed in relation to the dollar. Earlier this year the government was having sweet dreams of a rapid move towards convertibility at a rate of 80 roubles to the dollar, but at the start of September it was 210 to the dollar and likely to
12 deteriorate further. The budget deficit, which the Gaidar government has several times promised the IMF it will reduce to 5% is likely to reach 20%, as it did in 1991.3
All in all the IMF inspired policy has failed even to reach its so-called financial stabilization targets, while aggravating the crisis of the whole economy. The freeing of prices and the restrictions on money supply, in the framework of a strongly monopolized economy, has accelerated the rapid fall in production. The short term consequences of the total disarray in the economy have had a disastrous impact on agriculture where prices are rising more slowly than in industry, making producers reluctant to sell. With a harvest below expectations, a lack of machinery and bad infrastructure could lead to a severe food crisis in the coming winter.
But even before the winter, Russians have been paying a high price for the initial phase of reform". Real incomes have been drastically cut: prices for consumer goods have risen 1,170% over the past year with money incomes rising on average by 590%. Meanwhile runaway inflation has wiped out the savings of most ordinary people. Consequently total consumption went down by one quarter in the first six months of 1992
The drop in real income has affected most groups but at the same time wage differentials have widened sharply with white collar workers in education, the health service or the administration as well as students and pensioners lagging far behind, while some groups of workers (notably the miners) are faring comparatively well.S
But even if nominal wages are increasing, the shortage of cash money created by the tight monetary policy means that many workers are not getting their pay at all: "The deficit of money is growing sharply - there is nothing to pay out to people. The situation has been particularly catastrophic in (mining) Kemerovo and (oil-producing) Tyumen. On the first of May unpaid wages and pensions to the population may have been some 70 billion roubles. According to estimates, on the first of July the state may owe people well above 100 billion roubles".6
The slashing of public spending has had very serious consequences for education and the health service. Among signs of the deteriorating conditions and the general impoverishment are the rise in infant mortality (up by 9% between January 1991 and 1992), a drastic decline in the birth rate and the re-emergence of epidemic diseases such as typhoid fever not encountered in Russia for decades.
### Bankrupt industries
In the first nine months of shock therapy inter-enterprise debt increased from less than 100 billion roubles by early January and 600 billion by April 1 to the current astronomical figure of 3,000 billion (around 40% of GNP). This means that most enterprises have considerable outstanding debts, most of which cannot be paid. Izvestiya recently reported that nine out of ten enterprises in the Yekaterinburg region were seriously in debt. Many factories have had to reduce production due to problems with financing and lack of orders, sending their 1. Izvestiya, August 20, 1992. 2. Ibid, August 24, 1992. 3. Ibid, July 20, 1992. For a more comprehensive analysis of the Yeltsin-Gaidar reform see "Shock therapy comes to Russia" by David Mandel, International Viewpoint, no. 224, March 16, 1992 4. Izvestiya, July 7, 1992. 5. There are varying estimates of the drop in real income. On August 8 The Economist wrote: "real wages so far this year are only 40% of their average in 1991" 6. Pravda, June 9, 1992.
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RUSSIA Yeltsin's first year:
Russian political parties
COMMUNIST AND SOCIALIST ORGANIZATIONS
All-Union Committee of Communists: presents itself as the only succestion of 100,000) and the weekly Respublica (20,000). (Leaders: V. Lysenko,
Russian Peasants Party: was formed as an organization of private farmers out of the Movement of Independent Farmers in March 1991. It now •
September 28, 1992
RUSSIA staff on enforced vacations.
One example mentioned by Izvestiya is the Kalinin Plant in Yekaterinburg which has been forced to switch to a three-day week and is now paying its 40,000 workers an average of 2,000 roubles a month (below sor to the old ruling Communist Party of the Soviet Union (PSU), although no well-known former leader has supported it. On July 4-5, 1992, it held a "29th Congress of the CPSU" in Pushkino in Moscow. All the Communist groups were invited, but most did not show up. The 90 delegates elected a central committee as well as a control commission and adopted an Action Programme. The strength of this organization is unknown.
Russian Communist Workers Party: was founded in November 1991 out of the Communist Initiative and is mainly based on the former party apparatus in Siberia and the Far East. This neo-Stalinist party claims 20,000 members. (Leader General Makashov.)
All-Union Committee Party of Bolsheviks: was formed in November 1991 from different factions of the former CPSU (Unity, the Bolshevik Platform and others). It characterized the August 1991 coup as "stage-managed". It has come out with slogans such as "Motherland and Death", and "Socialism or Death". It is strictly Stalinist and has some 35,000 members. (Leader N. Andreyeva.)
Socialist Workers Party: was formed in October 1991 out of parts of the old apparatus and oppositionists. It considers itself reform Communist. It has some 70,000 members and over 40 deputies. (Leaders: R. Medvedev, I. Rybkin, G. Sklyar and L. Vartarasova.)
Russian Party of Communists: was formed in December 1991 as a reform Communist party (taking the New Economic Policy of the 1920s as its model) and successor to the Marxist Platform. It has some 5,000 members. (Leaders: A. Khrushchev and V. Burdyubov.)
Communist League: was formed out of a section of the former Marxist Platform by A. Prigarin. It has a few hundred members. It favours worker self-management and "all power to the soviets". It also calls for the unification of all Communist organizations
Party of Labour: was founded on August 29, 1991 as an initiative by the apparatus of the Moscow trade unions (M. Nagaitshev and T. Frolova), a part of the Marxist Platform (A. Buzgalin) and the Socialist Party (B Kagarlitsky) the Confederation of Anarcho-Syndicalists and Moscow deputies (N. Konchar and V. Kondratov). Its first conference took place in January 1992. The party presents itself as an organization based on the trade unions and defends working class interests. It is in favour of workers' self-management and democratic management of the economy, but also for the rights of independent domestic property owners.
There also a whole series of groupings such as the Association for the
Defence of the Rights of Communists, the Commission for the Investigation of the Activities of Mikhail Gorbachev, the Association of Left Patriotic
Forces at the University of Moscow and the United Front of the Working
The mouthpieces of the conservative Communist forces have been
Pravda (but no longer), Sovyetskaya Rossiya, Glasnost and Literaturnaya
Rossiya and the magazines Nash Sovremenik and Molodaya Gardiya.
SOCIAL-LIBERAL AND BOURGEOIS PARTIES
Social Democratic Party of the Russian Federation: was formed in May
1990; it is oriented towards classical revisionism and Scandinavian Social
Democracy. Most of its 7,000 members are from the scientific intelligentsia.
They are involved in almost every bloc building enterprise. (Leaders: B.
Orlov, O. Rumyantsev.)
Republican Party of the Russian Federation: originated in the
CPSU's Democratic Platform. It was founded in November 1990. It has undergone several splits and presents itself as social democratic. Most of its 7,000 members are from the CPSU and the scientific intelligentsia.
Together with the social democrats, they have formed a faction which has more than 50 deputies and controls the monthly Gospodin Narod (circulathe poverty line).? A large number of factories are effectively bankrupt — according to the Moscow Federation of Trade Unions 90% of the military industrial enterprises in
However, there have been no large-scale layoffs or major factory closures thus far. In spite of several readings the Supreme Soviet has failed to pass a bankruptcy law, reflecting pressure from enterprise managers and fear that factory closures will trigger off massive social unrest. On June 14 Yeltsin bypassed the Supreme Soviet by issuing a decree making it possible to declare enterprises bankrupt, but it still remains to be seen how and on what scale this will be implemented.
One of the main reasons for the relative social calm, in spite of the drop in living standards is precisely the very low rate of unemployment. There are only a few hundred thousand registered unemployed -less than 1% of the workforce, though many more workers are affected by forced reductions in working hours. But due to the intense struggle in the ruling circles around the question of enterprise closures, mass redundancies seem to have so far been averted, and it is unlikely that the forecast by the International Labour Office (ILO) of 10 million unemployed by the end of this year will come true.
### Enterprise closures
With Yeltsin's decree on bankruptcies and the announcement of a sweeping privatization programme it is clear that the issue of enterprise closures and property rights will be to the fore this autumn.? Recently the government has been trying to portray the issuing of share vouchers to every citizen as a miracle solution that will secure both a smooth privatization process and an even distribution of state-owned assets among the population.
In principle this system could offer the workers collective possibilities for taking a share in a given factory, but in practice this is nearly impossible because the authorities are working to discourage it. As Boris
Kagarlitsky remarks: "How can one discuss democratic privatization, with the participation of the workers' collective, if you don't pose the questions about how and where these collectives get the means to moderni-
7. Izvestiya, August 19 and 20, 1992.
8. ITAR-TASS, July 9, 1992.
9. The programme presented in Izvestiya on June 27,
1992 for example, aims at privatizing property No for eim pou aisin a2 50 billon in 1993 1 3 and 470 billion in 1994.
• claims 12,700 members and demands the "restoration of peasant property on the land", aiming to represent the "political, economic and social interests of peasants". Its journal Russkoye Pole has a circulation of
Civic Union: emerged from a bloc between the Democratic Party of
Russia, the All-Russian Party of Renewal and the People's Party of Free
International Viewpoint # 235 • September 28, 1992
RUSSIA ze production, how they receive credits, how stable deliveries can be secured, and what should happen to those who don't work in a factory. Of course, workers can be dragged into this process for various
50,000. It has seven deputies.
People's Party of Russia: was founded in May 1992 by the investigaexpedient reasons: it creates a collective tors Gdlyan and Borodin who had been strongly attacked because of some responsibility for what will happen. Then of the investigations they undertook. It stands for "economic freedom and later, when the enterprise closes or is sold human rights" and has 6,000 members. It is probably only a transitional forcheaply to a private entrepreneur, the blame will lie with the workers, who allegedly
Christian-Democratic Union of Russia: was set up in August 1989 by made wrong dispositions with the propervarious dissident groups; it has some 6,000 members, overwhelmingly relity". 10 gious believers from the intelligentsia. Its programme is based on that of its
The real conflict looming behind much of
Western counterparts, but it also includes social demands. (Leaders: A.
the factional scuffle around the Russian government is precisely the question of
Russian Christian Democratic Party: was created in June 1991; it is industrial development and with that the based on Christian values, promotes people's capitalism and has some place of Russia in the international division of labour. The policies of the Gaidar
Party of Constitutional Democrats: was formed in May 1990. It has government have been particularly benefi-
700 members and considers itself a liberal capitalist party. (Leaders: V.
cial for the speculative layers of entrepreneurs often linked to mafia-style structures
Constitutional Democratic Party (Party of Popular Freedom):
in the old apparatus, but have generally appeared first in June 1991 as the "reformation congress" of the former been harmful to the state enterprises.
Cadets, putting forward a neo-conservative economic programme coloured by nationalism. It demands a Russia in its "historic borders". Its 4,000 mem-
Zealous conformity bers are from the intelligentsia, and partly from the CPSU. (Leaders: M.
Throughout the process of drafting and
Russian Party of Democratic Change: was formed in September implementing the first phases of the "stabi-
1991 with the aim of providing the new middle class with a liberal programlization programme" the government has me. Its 1,800 members are from the intelligentsia and the former party zealously conformed with the demands of the IMF — to the point where Russia apparatus. (Leaders: A. Braginsky, Y. Gabely, A. Kissilov.)
Islamic Party of Rebirth: was set up in Summer 1990 and exists in all appears as the IMF "role model" for the the Islamic regions of the former USSR. It aims to unite the Muslims of all other CIS states. But even the $24bn prominationalities. It presents Islam as "the only force that can today withstand sed by the G7 - of which only about one
American-style universalism and its conception of a new world order". It billion has been paid over — is little more sees Islamicization as "the only chance for Russia to avoid geo-political than a drop in the ocean. According to ecoannihilation" The number of members is unknown, but in some places the nomics minister Andrei Nechaev the debt party has a mass membership (Tadjikistan). In Russia its main bases are in service of Russia will amount to $22bn in
Tatarstan, North Caucasus, Moscow and Leningrad. Its moderate wing, led
1992 alone." The West has put consideby W. Sadar, wants to create the conditions for an Islamic way of life, while rable pressure on Russia to win political and economic concessions in exchange for another under G. Djemal wants an Islamic Republic.
the financial support - prompting vice- president Alexander Rutskoy to describe