Russia: The Yeltsin years and the oligarchs

Workers’ hopes dashed by gangster capitalism.

Yeltsin in the early days

The death of Boris Yeltsin in April this year was the signal for a blatant propaganda offensive. Capitalist politicians and media portrayed him as a flawed but heroic leader who freed Russia from Stalinist dictatorship. Socialism was, once again, pronounced dead.

The ex-president of Russia, Boris Yeltsin, was buried on 25 April amid a pomp and ceremony not seen since the days of the tsars. It was the first religious burial of a Russian head of state for more than 110 years and was meant to show the world that Russia, under Vladimir Putin, had finally returned to all that was supposedly great and glorious before the revolutionary year of 1917.

Few Russians turned out to honour the first president of the Russian Federation after his death in the elite Central Clinical Hospital. They have little to thank him for. As Sergei Kozlovski wrote for the web-site of Socialist Resistance (the CWI in Russia): "Old people are dying every day. Their suffering in the last moments of their life, on uncomfortable beds in stuffy flats or on rusty trolleys in the corridors of overflowing municipal hospitals is far greater than that of the patient in the CCH."

Yeltsin’s anointed successor, Vladimir Putin, as if to put some distance between himself and his somewhat discredited patron, decreed that Yeltsin would not be buried at the Kremlin’s wall with most other past heads of state, but, like the somewhat dissident leader, Khruschev, in the Novodevichy cemetery.

Yeltsin and Clinton

At his graveside, however, were past ’world leaders’ like George Bush Snr, Bill Clinton and John Major who had given him whole-hearted support in the 1990s as he dragged the Soviet Union into the capitalist world. They rubbed shoulders with Russia’s two richest oligarchs who piled up vast fortunes through being part of Yeltsin’s inner circle – Roman Abramovitch, owner of Chelsea football club and still governor of Chukotka, and Oleg Deripaska, married to Yeltsin’s daughter (each of them is now worth well over £10 billion). All the current president’s men were at the funeral too – cronies from Putin’s St Petersburg days, themselves rich and powerful heads of industry.

The capitalist press, predictably, took this occasion to remind discontented workers and young people worldwide that there is no point in challenging their system. Fulsome praise was heaped on Yeltsin – the man who famously stood on a tank in August 1991 defending parliament against an attempted generals’ coup. After seven years in obscurity, he was again ’lionised’ in the world’s media for his role in finishing off ’communism’ and introducing the first-ever democratic regime in Russia.

What is the truth about the Yeltsin years? What did Yeltsin inherit when he became Russia’s president and what did he leave behind when he handed over the baton to Vladimir Putin at the end of the last millennium? Who lost and who gained in the tumultuous years of his presidency?

It is ironical that, as a member of the ’Communist’ Party for decades, Yeltsin must have argued many times against a return to the Russia of the tsars, which had been a nightmare for workers, peasants and soldiers. It was the despotism, tyranny and luxurious living of the emperors, the super-exploitation and hunger, the blood-letting of war under Russian and foreign capitalism, that were all swept away by the mass uprisings of an angry population, culminating in the Bolshevik revolution of 1917.

Much that was rotten and cleansed from Russian society has returned with the restoration of capitalism. There is the obscene wealth of the few – with just 36 people owning a quarter of all assets in Russia. One of them, Victor Vekselberg, splashed out £50 million on a collection of the tsars’ notorious jewel-studded Fabergé eggs! The average worker scrapes by on little more than £100 a month.

A new court camarilla has grown up around Putin which displays the same cold callousness towards the fate of millions as those of yesteryear, trampling on national and democratic rights and pursuing to this day a bloody war in Chechnya. Meanwhile, workers, pensioners and students see their incomes dwindle, public services are reduced to nothing and immigrants from the ’near abroad’ are hounded out of town.

Schools of falsification

To say that Yeltsin’s ’democracy’ was the first ever in Russia is a lie. In fact it is two lies! Firstly, his regime was far from democratic. Secondly, that of Vladimir Lenin and Leon Trotsky 75 years earlier was the most democratic form of government in history. The Bolsheviks were chosen to govern by majority, renewable votes, taken in elected councils of workers’ and peasants’ delegates.

Capitalist and Stalinist historians alike fail to show how Stalin’s rise to power, after Lenin’s death in 1924, marked a complete break with the revolution’s aims and principles, not a natural continuation. Stalin’s monstrous one-party dictatorship and all the regimes preceding Yeltsin’s rise to power could never be described as communism.

But the enormous potential of an economy from which private ownership of land and industry had been eliminated were proven in the USSR in the 1930s. The same capitalist propagandists who condemn ’communism’ ignore the unprecedented growth achieved by state ownership and planning. In the inter-war period the economy of the USSR grew at a pace that has never been equalled, let alone overtaken – not by Japan, the ’Asian tigers’ or even today’s China. It went from being an India in Europe to being the second most powerful industrial nation in the world.

Like capitalism’s phenomenal rise in the 19th century, there were huge overheads. Stalin’s bureaucratic and tyrannical rule meant the deaths of millions and human suffering on an unbelievable scale. If the state-owned planned economy had been run along the lines of real workers’ democracy, with workers themselves running things instead of bureaucrats and policemen, with their energy, ingenuity and ability unleashed, then a rate of development even four times greater could have been achieved. Did Yeltsin prove that capitalism was a superior system?

Gorbachev and Yeltsin

Gorbachev and Yeltsin

From Gorbachev to Yeltsin

After ten years as First Secretary of the Communist Party in Sverdlovsk, and particularly when he was transferred to Moscow to head the city party there, he became widely known (and popular) for his vigorous campaigns against privilege, red tape and corruption. While still enjoying the perks of office himself, he was seen to ride on public transport, exposed the pilfering of the state by bureaucrats, and raised the banner of multi-party democracy in a campaign against article six of the constitution, which prevented any but the ruling Communist Party from participating in elections.

Yeltsin carried further the process begun by Mikhail Gorbachev and his fumbling reform measures of glasnost and perestroika – transparency and restructuring. Gorbachev had become aware that the rule of the bureaucracy could not survive the stagnation that had beset the USSR. Roy Mevedev tells Giulietto Chiesa in the book, Time of Change, that according to new figures, national income had not grown for the previous 20 years. Gorbachev was attempting to ’re-boot’ the economy, clinging to the idea of introducing only elements of the market into the state-owned, centrally planned system. He even cited Lenin’s example of the New Economic Policy of 1921, a policy introduced in an entirely different period and in entirely different circumstances.

In Gorbachev’s day, there was no such thing as workers’ democracy in the way the economy was run. The plan was introduced and enforced from on high. That was why the stagnation had set in, just as Trotsky had explained it would if workers proved unable to wrest power back from the Stalinist bureaucracy. The vital ’oxygen’ for a planned economy to survive can only be generated by major decisions about production and distribution being made by people working in industry, public services and by consumers.

A stagnating system would not be able to keep the privileged elite in the manner to which it had become accustomed, nor would it be able to maintain the basic provisions for workers of cheap housing, guaranteed jobs, free public health and education. The bureaucrats, Trotsky explained, could save themselves in the long run, if workers were unable to regain political power, by using their privileged positions to become actual owners of the means of production – capitalists. Exactly what happened. But was there an alternative?

As the CWI explained at the time when Gorbachev began his experiments, he was trying to introduce reforms from above to prevent revolution from below. He nearly did not succeed! Yeltsin was the individual in history destined to complete the process Gorbachev had begun. In his hands, the proliferation of reforms of the old system turned into something qualitatively different, a rapid ’transition to the market’.

Yeltsin, while he clashed with Gorbachev and the party leaders on his rise to fame, had, like them, been accomplices in a one-party regime which discredited the very ideas of ’socialism’ and created a resentful hostility amongst the population. Other fully-paid up members of the Communist Party included today’s president, Vladimir Putin, Roman Abramovitch and Mikhail Khodorkovsky (who came up through the ranks of the Young Communists (Komsomol)).

Gorbachev himself hesitated long and often before launching reforms, fearing the demise of the old regime in which he (and Yeltsin) had come to prominence. Like nearly all CPSU leading ’cadres’, he acknowledged the revelations made in the Khruschev era of Stalin’s heinous crimes. He pushed through the rehabilitation of most of the leaders purged or persecuted by Stalin though never his chief opponent, Leon Trotsky. He also instituted a gradual easing of censorship which included the unbanning of books like those of Solzhenitsyn, exposing the horrors of life in the gulags and under Stalinism generally.

When Gorbachev began his reforms, with the decentralisation of certain decisions and allowing workers to express their criticisms about the way things were done, he opened the floodgates. Workers keenly embraced the new freedoms. They filled out the STKs (workplace committees) set up to allow a limited degree of workers’ control. They voiced their manifold discontents and searched out a new way of doing things, contemplating how to throw off their backs the factory and trade union ’bosses’.

There were some on the left internationally who thought Gorbachev was going to carry through the ’political revolution’ that Trotsky had spoken about. This was wrong This would have meant the destruction of his own privileged existence (symbolised by the luxurious Black Sea villa in which he was ’imprisoned’ during the generals’ attempted coup of 1991) and that of the top layer of state and military officials and party leaders. There was a vast army of managers, functionaries and spies at every level in society. The ruling caste was living like a parasite on the back of the workers’ state and there would be no place for them in a genuine workers’ democracy.

As Yeltsin began his defiance of the party leadership and his attack on privilege and corruption, workers supported the campaign for multi-party democracy and began to take things into their own hands. In elections they replaced party hacks with new representatives. They exposed and complained about the luxurious lifestyle of the elite. Unions independent of the ’vertical’ state ones began to appear, new political movements and embryonic parties were being formed, new newspapers appeared, street demonstrations took place in defiance of the authorities and workers, especially the miners of Donbas and Kuzbas, began taking strike action.

Warnings unheeded

In 1990, the Labour MP for Liverpool Broad Green, Terry Fields, himself a firm supporter of Trotsky’s tireless struggle against Stalin’s dictatorship, visited Kuzbas miners. Speaking at a seething mass meeting he conveyed the solidarity of workers in Europe with their fight for the right to decide their own futures. His every sentence was warmly received until he began to warn against taking the path of market capitalism: "You will, unfortunately, not have an America, a Sweden or even a Britain [where Thatcher was attacking everything workers had fought for]. You will have Latin American capitalism: mass unemployment, hyper-inflation and dictatorship!" Some of the miners, but especially their pro-market ’advisers’, began calling ’time’s up!’, tapping their watches and literally closing their ears to what was being forecast!

CWI members beginning to work in the ’Soviet Union’ at that time witnessed the workers’ enthusiasm for ending totalitarianism. They were flexing their muscles and sensing their collective power. But we were also keenly aware that organised forces were not in place that could lead a struggle to dispense with the hated bureaucrats and establish genuine workers’ democracy. If that had been possible, it would have been on a far higher level than in 1917, with much more chance of spreading internationally.

The attraction of the market was winning out. Illusions were multiplying. Intellectuals and others who had suffered at the hands of Stalinist dictatorship had set their face against ’communism’. Unlike in the thirties internationally, when writers and cultural figures had been attracted by a system in the Soviet Union that was going ahead, intellectuals in the Soviet Union, nearing the last decade of the 20th century, saw capitalism going ahead. They and millions around them fell for the idea that it would be accompanied by democracy, freedom and even general prosperity. Many of the intelligentsia, along with high-ups in the apparatus, switched sides as easily as crossing a street.

After the unsuccessful attempt by generals in August 1991 to turn back the tide, the process was unstoppable. The old regime of a Stalinist planned economy was a thing of the past. No-one inside or outside the bureaucracy could restore it. Even the generals’ declaration of an emergency had spoken of protecting all forms of property, including private, and continuing the ’reforms’. The coup leader, Gennady Yanayev, chaired a televised ’press conference’ with hands shaking and within three days the coup attempt was over.

The CWI stood implacably for independent action on the part of workers – who had spontaneously opposed the return of the generals. Trolleybus-drivers in Moscow, for example, had immediately overturned their vehicles to block the path of the tanks and appealed to the tank-drivers to defy the generals. We urged no trust in Yeltsin and capitalism and a struggle for genuine workers’ democracy and socialism.

The enfeebled Gorbachev was pushed aside by the swash-buckling Yeltsin. One of his first acts after the defeat of the coup was to outlaw the Communist Party of the Soviet Union. Gorbachev had proved unable to prevent, by force or persuasion, the declarations of independence in the Baltic States. Now the Stalinist leaders of all the republics that had been part of the USSR began to change their spots, renouncing ’communism’ and posing as champions of national and social freedom. All of them ended up presiding over far from democratic states and collapsing economies.

The USSR that simply collapsed before the end of 1991 was not the same USSR that was set up in 1922 under Lenin – the voluntary federation of previously subject nations, now choosing to travel together on the road to socialism. The ’Soviet Union’ had long ceased, from the days of Stalin onwards, to embody the principles of workers’ democracy and had been a ’prison house’ of peoples.

As ’communist’ leaders in the past, both Gorbachev and Yeltsin had gone along with the severe repression of national aspirations involved in holding the Stalinist Soviet Union together – by force. Yeltsin famously nailed his colours to the mast of national independence. But at the end of 1994, just three and a half years after coming to power, he was dispatching troops to crush the national revolt in Chechnya, employing a barbarity worthy of the tsars. A year and a half later in 1996, when a ceasefire was announced in the run up to the presidential elections, tens of thousands of people, mainly civilians, lay slaughtered in Chechnya. The capital, Grozny, was as derelict as any bombed out city in the second world war. A few old people and youngsters, unable to escape, eked out an existence in the cellars of the city, conjuring up scenes like those in the film ’The day after tomorrow’.

Revenge attacks by Chechen fighters, (or supposed revenge attacks with some possibly organised by the government itself), left hundreds of Russians dead – the bombings of apartment blocks in Moscow and elsewhere, the hostage taking and siege at a Moscow theatre, and, later, as a reaction to Putin’s bloody ’Second Chechen War’, the Beslan school tragedy.(54)

Dictatorial power

Capitalism was bursting on the ex-USSR, raw in tooth and nail. The democratic phase of the counter-revolution was ending in a sham of parliamentary democracy. Unprecedented catastrophes beset the economies and societies of that vast area of the world.

Having kicked away the launching mechanism for his rise to power, in the person of Gorbachev and the edifice of the Communist Party, Yeltsin began to use methods as authoritarian as any Great Russian emperor – or Latin American dictator! The fragile elements of democracy that had been introduced acted as a flimsy fig leaf to cover the gargantuan struggle for supremacy being waged on behalf of his own clan or ’family’. In the scramble over the spoils of privatisation, he was prone to dispense with democratic methods altogether.

Yeltsin and tank driver

Yeltsin and tank driver

In 1993, he proposed a constitution for Russia extending the already considerable elements of personal power he had given himself. He favoured rule by decree and plebiscite rather than dependence on majority votes in the Russian Supreme Soviet (parliament). Later, with almost total control over the media – especially the television channels – and the state apparatus, he was able to manipulate elections and referendums alike.

In September 1993, when his lurch towards Bonapartist rule failed to get the necessary support, Yeltsin moved to dismiss the parliament. After days of siege and skirmishes, he ordered tanks to fire on the White House! The vice-president, Alexander Rutskoi, and the ’speaker’ of parliament, Ruslan Khasbulatov, defended themselves arms in hand. Finally, they were arrested and imprisoned: as many as 700 people died in the assault. It is a myth that Rutskoi and co were risking their lives to defend parliamentary democracy. They were as intent as Yeltsin on getting their share of power and control over the processes going on in the country. (Later the rehabilitated Rutskoi operated as provincial governor of Kursk on the basis of blatant nepotism and crony capitalism. Between 1996 and 2000, relatives of his ended up in control of the oblast’s oil concerns, pharmacies, public security and cultural affairs!)

It was the very ruthlessness and stubbornness of Yeltsin that enabled him to force through the fiercely unpopular measures needed to re-establish capitalism in Russia. Compared with what is still happening in China today, the process was over in no time. But at a huge cost in human suffering, economic collapse and also to the prestige and authority of Yeltsin himself – at home and abroad. He resorted more and more to using his control over the media and his ’family’ cabal to tighten his increasingly shaky grip on power. His bodyguard and drinking partner, Alexander Korzhakov, began to call the shots, literally in the case of launching the December 1994 attack on the Chechen government of Dzhokhar Dudayev. Present day commentators can bleat about how a more ’sensitive and intelligent leader’ might have been preferable, but he was the man for the job. And what a job!

Shock therapy

’Fast track’ and ’shock therapy’ ideas for ending the state monopoly of production, distribution and exchange had been under discussion for some years amongst young free-market enthusiasts like Gaidar, Yavlinsky, Chubais – the ’Boys in Pink Trousers’. They were eagerly supported by the International Monetary Fund, Jeffrey Sachs and the Friedmanite ’Chicago Boys’. Yeltsin took them up and implemented them with a vengeance.

Prices were ’liberated’ and market practices introduced. Yeltsin promised, when subsidies were removed that, although ’life will be hard for six months’, after that, prices would fall. Instead, in 1992 they rose by 2,529% – Latin American proportions indeed!

Vouchers worth 10,000 roubles each were given to 144 million citizens, entitling them to a share in Russia’s major ’enterprises’. But it was inevitable that most cash-strapped workers, not seeing much value in them anyway, would sell their vouchers immediately for cash. This enabled Russia’s future oligarchs to carry through their rape of state property or ’primitive accumulation’ of capital, as they were fond of calling it. Another form of the big privatisation robbery was the ’loans for shares’ practice. Well-placed individuals, many of them making big money on currency exchanges at the time, could grab big chunks of state enterprises through their ’tin-pot’ banks by offering cash in exchange for equity. The so-called ’red directors’ – bureaucrats who managed the state firms – also, belatedly but eagerly, got involved in asset-stripping the state-owned economy and enriching themselves.

What remained of the central plan had disappeared and the state budget had dried up. Pensioners and conscripts alike went hungry. Army officers were known to use their positions of power to enrich themselves from whatever funds came their way. By the end of 1993 about 85% of small enterprises and one third of total state assets had been privatised.

State property was thus ’distributed’ according to connections built up over years in the party apparatus or through offering ’incentives’ or bribes to those who made the decisions – insider dealing on the grand scale! Crony capitalism was rife. So too was open theft, backed up by mafia tactics.

Factories ground to a halt. Between twelve and 15 million jobs disappeared. Tens of millions of workers were still going to work but receiving no pay. Some received payment in kind – potatoes, pots and pans, flour and, in one engineering factory, tampaxes! Even in 1998 it is estimated that barter deals exceeded 50% of all transactions. Enterprises were accumulating non-payments in terms of debts on trade, non-payment of taxes and wage arrears. The ’shadow economy’ accounted for between 40% and 50% of GDP. Inflation was robbing pensioners, students and workers of everything they had. Literally millions of people, beguiled by strident television advertising, entrusted what meagre savings they had to pyramid companies like MMM, promising annual returns of 1,000%.

At its height, in 1994, MMM was pulling in more than $11million a day for its shares whose price rocketed. So much so that Yeltsin issued a decree prohibiting the publication of share prices and in July, the MMM offices were closed for tax evasion. The company was estimated to owe the state 50 billion roubles and the ’investors’ between 100 billion and 3 trillion roubles ($50 million to 1.5 billion). Mass protests broke out of ’deceived investors’ but when MMM founder, Sergei Mavrodi was arrested, his publicity machine turned him into a hero battling with an unjust government. He then stood for parliament and got elected to the Russian Duma, promising to pay back all the investors. After his judicial immunity as a deputy (MP) was revoked, he tried to contest the presidential election in 1996 but failed to get his signatories validated.

MMM was declared bankrupt in September 1997 and its founder disappeared with the investors’ cash. At least 50 people, having lost all their money, committed suicide. In the end Sergei Mavrodi was brought back to stand trial. He served just four and a half months in prison and was released in May of this year.

Rise of the oligarchs

By the presidential elections of 1996, Yeltsin had become so unpopular that he risked losing the contest. He tried to postpone it and even to dispense with it altogether. The strain of the way he was living – the drink and the abandonment of his original principles – took its toll in the form of the heart attack he suffered between the two rounds of this election. His ’victory’ was extremely contrived. In fact, it was probably only possible, in the style of Berlusconi later in Italy, through his tight control over the country’s mass media and bare-faced election fraud.

"The basis of Yeltsin’s second term government [after his re-election in 1996]", says Jonathan Steele, a Guardian correspondent in Russia at the time, "was a group of multimillionaire businessmen who had done well out of privatisation… Yeltsin had a succession of different chiefs of staff and press secretaries, but relied heavily on the ’family’… in 1998-99 he sacked and appointed five prime ministers in 13 months". In behaviour characteristic of all dictators, "the president was jealous of anyone stealing his limelight".

The author of the book, Sale of the Century, the free-marketer Chrystia Freeland, wrote on 26 April in The Financial Times: "Most damaging was the creation of the oligarchs – an act based partly on an extreme faith in the power of private ownership, no matter who the owner was or how the property was acquired". And yet she turns things on their head by claiming the neo-cons ’got it right’. "Central planning did indeed turn out to be a less efficient way of running an economy than free markets!"

Where’s the proof? Even John Lloyd, also a champion of capitalism generally, was forced to admit in the same paper, the day after Yeltsin’s death, that, "by the time he resigned on New Year’s Eve 1999… the indiscipline, corruption and inertia at every level of bureaucracy was probably greater than during Soviet [Stalinist] days, when the party could act as a disciplining force".

So no democracy and the most rapid transfer of the ownership of the means of production from the state to a handful of individual capitalists ever seen! At the same time, the most drastic drop in production in modern history.

By 1997, according to pro-market pioneer, Rose Brady, "A bigger share of property was in private hands in Russia than in Italy. But, as in Italy, in Russia large conglomerates held leading places in industry, and they were made up of formerly state-owned structures that had been privatised. Like Italy’s, Russia’s underground operated freely alongside the real economy, and people thought nothing of not paying the state’s exorbitantly high taxes. As in Italy, in Russia the mafia controlled important sectors of the economy. And, as in Italy, in Russia the state was so weak that people had largely lost faith in the idea that government would help them". At this time "70% of GDP was produced by the private sector. In Italy the figure was 50%!" (Rose Brady, Kapitalizm)

Boris Berezovsky, now living in luxury exile in London, boasted that just six private banks (his among them) controlled over 50% of the economy and could dictate, as they did in relation to Viktor Chernomyrdin, who the government should have as premier. Yeltsin was continually promising that the bottom of the collapse had been reached and things could only get better. But then came the Asian crisis followed by the very special Russian debt crisis. In 1998 Yeltsin was forced to revalue the rouble and default on its international loan repayments in another Latin American-style catastrophe. The rouble lost three-quarters of its value, slumping from six to the dollar to 20 in just three weeks. This led to another round of mass non-payment of wages.

Miners from different parts of Russia had already for three months been holding a permanent picket at the Russian government’s White House to get their money. They commented that companies might now pay some of their debts which had suddenly become much cheaper! Exports were worth far more and rouble debts much less. The miners anticipated that taxes owed to the government might also begin to be paid but they would be worth half of what they were before!

A few short years of disruption and anarchy had brought about an economic collapse unprecedented in history. Vladimir Popov, in the March-April edition of New Left Review, reiterates that, between 1989 and 1998, the Russian economy lost 45% of its output. This represents an economic collapse on a greater scale than even that of the Great Depression, which followed the stock market crash of 1929. "Output fell faster than during Operation Barbarossa, Hitler’s invasion of the Soviet Union in 1941", one blogger pointed out after Yeltsin’s death. In a number of newly formed countries like Moldova, Georgia, Ukraine and Armenia, the percentage collapse was even more devastating than in Russia. The economies of some of these countries have simply not recovered and remain far below their pre-1989 levels. Others have just managed to get back up and beyond 110%.

Popov maintains that Russian GDP in 2006 was still only 85% of the 1989 level. "Life expectancy and levels of education are still inferior to those of the USSR", he says, "and even below those of Cuba". One hospital in five still lacks hot water and sewerage facilities. Only two countries had higher murder rates – South Africa and Colombia.

Later Popov says that "investment is still 40% of what it was in the last year of the Soviet Union’s existence… The share of state spending in GDP remains at less than half that of the USSR". Popov cites a poll in 2004 which showed 41% of people wanting Putin to return the money that ordinary people had lost during the ’reforms’. Tony Wood, also writing in New Left Review, comments that the Putin administration has not actively redistributed any of the vast oil wealth to those dispossessed by the ’reforms’ of the 1990s. He talks with concern about ’resource nationalism’ and ’sovereign democracy’ – Russian independence from western imperialism and a ’different’ idea of how much democracy is necessary.

Popov concludes his ’findings’ with the assertion, "democracy is (also) needed, but only later, when the rule of law has been established". So Marxists are right to assert that, for capitalists, democracy is dispensable. Yeltsin was justified in his ruthlessness!

But Wood complains about the very form of state that Putin has inherited and adapted since the days of Yeltsin. It "has little or no autonomy from the economic interests of Russia’s elite". Putin is "deliberately working to maintain the fragmentation of domains and interests that has thus far blocked the emergence of a unified capitalist class". Cliques and factions are the order of the day, Wood says, as evidenced by the number of St Petersburgers in Putin’s retinue.

Gangster capitalism

Igor Yurgens, a banker and top figure in the Russian Association of Industrialists and Entrepreneurs, confirms the brutal origin of Russia’s bandit capitalism. Writing in a special Financial Times supplement on Russia (20 April) he says: "Inside the country, the population still questions the legitimacy of some acquisitions of huge wealth, concentrated in some big groups… But, after 15 years… we have people who I think should be considered legitimate owners. By this time they’ve paid enough in revenues, taxes and job creation. Those who did not are either in jail, dead or bankrupt!"

Indeed, the gangster nature of Russia’s capitalism is indicated in the notorious contract killings of bankers and journalists, the poisoning of one-time agents, the helicopter crashes involving opponents of Putin, and the mysterious illnesses some of them develop along with the regular arrests of protesters against the regime: all point to a Bonapartist regime still struggling to placate the demands of all the classes but not stopping at brute force to get its way.

Even Non-Governmental Organisations have been chased out of the country for ’meddling’ in its politics (shedding a little light on the injustices and deprivations suffered by the mass of the population under Putin!). Tony Wood also points out: "Over a million Russians…who have passed through Chechnya since 1994 have either committed or witnessed acts of boundless brutality, and for all of them, unlimited force is an officially sanctioned mode of conduct. Aggression is now rooted in Russian public and political life."

And now, with his death, the man, responsible for the most far-reaching social counter-revolution has escaped all responsibility! Archie Brown, author of ’Seven Years that Changed the World’, echoed the views of many when he wrote in the Guardian of 26 April that, during Yeltsin’s ’reign’, "The level of corruption was such that that his main concern, when picking a successor, was to find someone who would safe-guard him from prosecution."

It is a myth that Putin has cleaned up the act. His cabinet is full of heads of industry and of state forces – the siloviki or power men. According to Olga Kryshtanovskaya and Stephen White, the siloviki constituted a mere 4.8% of the Politburo in 1988. By 1993 they were 33%, and ten years later they constituted a majority in the cabinet with 58.3%.

These figures indicate a very large element of state capitalism in the Russian economy – elements of state ownership and control that benefit the big capitalists. Putin’s government is a government not only for the oligarchs but of the oligarchs. His ’purge’ of people like the oil oligarch Mikhail Khodorkovsky has been motivated more by the latter daring to consider using his wealth and influence to develop opposition to his dominance than any ’moral’ considerations.

The renewed tensions with ’western’ imperialist powers are no new version of the cold war, which was a contest between states representing different social systems – capitalist ownership and state-ownership. Interviewed in the Financial Times on 19 April, a likely contender for Putin’s job, Sergei Ivanov, rebuts criticisms of Russia’s ’energy imperialism’. He insists: "Raising gas prices to Ukraine and Belarus, is due to an embrace of capitalism, not a throw-back to Soviet-style imperialism" (or Stalinist struggle for supremacy CD). "Oil and gas have a price. In the mid-1990s you taught us how to be a market economy. We learnt our lesson!"

The Financial Times itself adopts the concept of ’Kremlin Inc.’. This it defines as: "The web of state-controlled corporations that has been created under Mr Putin and chaired by ministers and senior officials".

Revival of workers’ struggle

In spite of the vast wealth being amassed in Russia’s state coffers from energy, Putin promises nothing for the long-suffering people. Genuine democracy is a chimera, but the strengthening of the economy can spur workers to take action to recoup their vast losses. The recent growth in the size and effectiveness of new unions in the car factories near to St Petersburg and elsewhere are the most encouraging signs for the future.

A Moscow Times journalist reported in July 2006 from Vsyevolozhsk, in the Leningrad region, that Aleksei Etmanov had returned from a Ford workers’ international conference in Brazil, and conducted a victorious strike that caused grave concern among the multinational firms that have moved to Russia, attracted "by low labour costs and the virtual absence of effective trade unions". "In one month he recruited 1,000 workers for his small union and half a year later they won a 17% pay increase. Now he is setting up a national autoworkers’ union". This involves workers at the giant Togliatti car plant near Samara where members of Socialist Resistance (CWI, Russia) have been active supporting the building of an independent workers’ organisation.

Such developments mark a new stage in the build up of opposition to Putin’s regime, building on the spirit of defiance seen in the mass protests and blockades of pensioners and students in January 2005 against the monetarisation (ie drastic cutting) of their benefits.

Looking back on the Yeltsin years, most thinking workers will see that what Terry Fields warned of back in 1990 actually happened. Capitalism did bring with it mass unemployment, hyper-inflation and dictatorship.

Yeltsin and Putin

Yeltsin and Putin

The Putin government, partly thanks to oil and gas, in which the state now has a huge stake, may be somewhat more stable than that of Yeltsin. But Putin’s jumpiness over billionaire Berezovsky’s call for ’revolution’ is understandable. Hans-Joerg Rudloff, Chairman of Barclays Capital, attending a Russian Economic Forum in London on April 23, gave a dire warning to his fellow capitalists. (The Forum was held on the eve of Boris Yeltsin’s death and Rudloff was one of the few representatives of Putin’s Russia not withdrawn at the last minute in protest at Berezovsky’s comments.) According to the Moscow Times, he warned that a downturn in Russia’s economy was on the way. He also warned: "The developments of the past seven years are being rewarded excessively, and so will be penalized excessively".

The oligarchs, chess champions and nationalist bands turning out on protests today, however persecuted and battered by the state forces, will not prove able (if even willing) to transform society in the interests of working people. The generation that has grown up since the Yeltsin years will question and challenge Russia’s wild and untamed capitalism. New forces reviving the ideas of genuine democratic socialism and communism will arise and grow rapidly, in numbers and in fighting capacity, in the white heat of future class battles.

The president’s men

Putin’s cabinet and unofficial Politburo include the following officials who double as heads or senior executives of state-controlled companies. Nearly all of them go back a long way with Putin:

First deputy Prime Minister Dmitry Medvedev is chairman of the board of Gazprom, the world’s second-largest company by market capitalisation after Exxonmobil. He served in the St Petersburg mayor’s office under Putin in the 1990s.

Another first deputy prime minister (!) Sergei Ivanov is chairman of the board of the United Aircraft Corporation and former defence minister. Also from St Petersburg, he was a student at the KGB academy in Putin’s class in the 1970s.

Igor Sechin, deputy Kremlin chief of staff and the unofficial leader of the Kremlin siloviki (powermen) clan, is board chairman of Rosneft, the main beneficiary of the dismemberment of Mikhail Khodorkovsky’s Yukos. Sechin served with Putin in the St Petersburg mayor’s office.

Sergei Chemezov is head of the state arms monopoly, Rosoboronexport. He and Putin met when both were KGB intelligence officers in Dresden, East Germany, where the two lived in the same apartment block and their families socialised. The Wall Street Journal quotes him as saying: "You know, we’re not really the state, we’re businessmen", he says of Rosoboronexport. "Call it state commerce". (Call it state capitalism of the first order! – CD)

Viktor Ivanov is chairman of the board of Aeroflot. Another colleague of Putin’s in the St Petersburg mayor’s office.

Nikolai Patrushev has succeeded Putin as the director of the FSB, the successor of the KGB.

Sergei and Viktor Ivanov, Sechin, Chemezov and Patrushev were named in a recent interview by well-respected Kremlinologist Olga Kryshtanovskaya as Putin’s unofficial siloviki politburo.

Vladimir Yakunin heads Russian Railways, a state monopoly. A close friend and neighbour of Putin’s in a gated dacha community near St Petersburg.

Author’s Footnote

Cathedral of Christ Saviour

Cathedral of Christ Saviour

When it comes to religion, you can see how easily, when circumstance require it, a ’leader’ can switch from avowed atheism to religious piety. The pictures of Yeltsin and subsequently the long-time KGB man, Putin, participating in religious ceremonies, alongside the patriarchs, were laughable. Yeltsin notoriously never quite mastered the art of holding a candle at an Easter service but went on to be buried with full religious rights in the Cathedral of Christ the Saviour.

This cathedral, incidentally, was re-built on its original site, at a cost of $300 million on the orders of Yeltsin himself, in league with, Yuri Luzhkov, mayor of Moscow and enjoyer of some of the fattest pickings of Russia’s restoration of capitalism. (His wife is the richest woman in Russia with £3billion amassed through the giant construction firm – Inteko!).

Stalin’s destruction in 1931 of the original cathedral – the product of vast amounts of human labour and craftsmanship – was an act of vandalism. But, in my opinion, it was just as ’criminal’ of the new rulers of Russia, to destroy what had been built in its place. The massive heated outdoor swimming pool built on the site was extremely popular amongst the low-income population of Moscow. School-children would train there. Grannies would meet up for a swim-around and a chat. Workers would come to freshen up before or after a hard day’s work. Those snatched moments would constitute one of the few delights available in an otherwise grey and grinding existence.

Longer version of article by Clare Doyle carried in June issue of Socialism Today

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