Instability and Fragmentation

The Russian elections of December 1993 were a further step in Russia's transition from a fragile, embryonic democracy to a condition of chronic instability and at least partial disintegration. The already advanced process of gradual coming-apart-at-the-seams will probably continue, to be followed in due course by determined efforts to reunite the country, most likely led by forces of militant Russian nationalism.

Let me first summarize why I hold these views, before laying some of them out in more detail. I have argued since August 1991 that while conditions in Poland in 1989-90 were probably suitable for the policies of "shock therapy" to succeed, Russian conditions in 1991 were very different (see my "The Coming Soviet Collapse," in Dick Clark, ed., United States-Soviet and East European Relations, Ninth Conference, Aspen Institute, Washington, D.C., 1991, pp. 9-17). I held that if shock therapy were to be introduced in Russia, as advocated at that time by Professor Jeffrey Sachs and others, it would be premature—and it would fail. Neither the political nor the economic culture of Russia had matured sufficiently for such therapy to work. Unlike in Poland. there was nothing resembling a popular consensus in favor of it. Rather, society was riven by profound divisions on the most fundamental issues of political and economic values and institutions.

A few months later, in October 1991, urged on by Sachs and others in the West, President Yeltsin nonetheless decided to adopt a shock-therapy program with the aim of stabilizing the Russian economy. The IMF, acting for the G-7 governments, became Moscow's principal foreign partner. By the spring of 1992, however, after having lifted many price controls, the Yeltsin administration found itself facing fierce domestic opposition. Anxious to ensure its own survival, it backed away from much of the medicine prescribed by the IMF, but neither side abandoned the whole enterprise. The Russian government kept trying, periodically, to meet the conditions it had agreed on with the IMF, even though it usually failed badly. The IMF, for its part, tried to bend its rules of conditionality, though not beyond reasonable limits. The predictable result of all this was that the IMF wound up handing over only a small proportion of the planned assistance.

In January 1994, deeply shaken by the unforeseen outcome of the elections, the dominant forces in the government decided—despite occasional rhetoric to the contrary—to renounce what they saw as the folly of "market romanticism." They resolved to stop trying to meet the IMF's politically unfeasible conditions, to liberate themselves psychologically from their humiliating feeling of dependency on foreign taskmasters, and to turn instead to some traditional, nonmarket means of controlling the economy.

Yet these decisions by the government are almost certain to move it out of the frying pan and into the proverbial fire. Although the reforms have not created a working market, they have destroyed most of the means by which the government once controlled the economy. Russia is caught in a no-man's-land between the old "administrative-command" system and an as yet unattained market. The probable result will be hyperinflation, to be followed not by a recall of the economic reformers, but by increased opportunities for extremists and a further worsening of the political instability that has been highlighted up to now by the coup of August 1991 and the incipient civil war of October 1993. The central government is likely to lose much of its remaining control over the country, and Russians may be forced to struggle for survival in an increasingly regional framework. After a year or two of this, the ground could be ready for the emergence of an ultranationalist movement much more dynamic than the one that is now being led by Vladimir Zhirinovsky. Such a movement could capitalize on the prevailing sense of humiliation and impoverishment, and might well succeed in reuniting a fragmented country.

Lest readers think that I am exaggerating the extent or intensity of Russian disillusionment with Western recipes, let me adduce evidence from the December elections and then from some...