March-April  1999

Debilitated Power Of The New Czars

Bloated by excessive drinking, kept alive through an infusion of foreign ‘assistance’, nurtured by a mafia, sustained through false propaganda of ‘fitness’, surviving through autocratic power.... such could be an apt description of either Yeltsin or the Russian economy. Nearly a decade of ‘economic reforms’ — liberalisation, privatisation, lumpenisation — has reduced a country to ruin, destroyed an entire populace and paralysed a whole generation. Premature deaths, disease, malnutrition, alcoholism and freezing to death in Russia’s terrifying winters ... are all gifts to the Russian people by the ‘reformers’ and their international guardians. Murder, rape, loot and the law of the mafia are the ‘advantages’ of the present imperialist-style democracy. Unemployment, unimaginable inflation, destruction of all savings, non-payment of wages is the bourgeoisie’s new bequest to the people.

And amidst this muck and filth has grown a handful of monsters — the ‘New Russian’ or the Oligarchy of seven leading bankers, the handful of oil magnates and the politico-financial mafia. It is this clique that is running the giant conglomerates worth billions of dollars, egged on by international financial magnates, who have themselves made windfall profits manipulating Russia’s bankruptcy and destroying its currency. It is these robber barons, together with their accomplices in the top echelons of the government, bureaucracy and army, who are primarily responsible for the present state of collapse, the prevailing anarchy and the degradation of the lives of the people.

Today’s continuing crisis, which struck the Russian economy on August 17, ’98, is the combined effect of the internal policies of the Russian rulers and the effect of the present world economic crisis that first struck South Asia ... and then Russia. Liberalisation and privatisation has given neither democracy nor freedom. The Brezhnev-type dictatorship has merely been replaced by the Yeltsin-style autocracy and law of the mafia; state monopoly capitalism has been replaced by the monopoly capitalism of a handful of oligarchies; poverty and destitution created by acute shortages, militarisation and agricultural stagnation of the Brezhnev period has been replaced by acute poverty and hunger of the ‘free market’; fake ‘marxism’ has been replaced by fake ‘freedom’; the dachas of the party bureaucrats have been replaced by palaces of the new bourgeoisie .... nothing has significantly changed, only, people’s conditions, which were bad, have deteriorated enormously.

The line between state capitalism and private enterprise is thin .... both representing different forms of rule of the bourgeoisie. It was,in fact the severe crisis in the economy during the latter part of the Brezhnev era coupled with the rising tide of discontent of the people against dictatorial rule that resulted in the collapse of state capitalism and its replacement with private enterprise. Due to the lack of a genuine communist force to lead this mass upsurge; a section of the bourgeoisie, backed by the West, diverted this revolt against the very people themselves by introducing a most ruthless, mafia-style carpetbagger capitalism.

In this article, we shall try and understand Russian society as it exists today.... its internal structures and its geo-political significance in the world.

(1) Collapse of the Russian Economy

In the past eight years, since the collapse of the Soviet Union and the introduction of Western-style ‘economic reforms’, the economy (GDP) has shrunk 60% and industrial output has fallen about 70%.¹ Capital investments in the Russian economy in 1996 were less than 60% of those in 1991. Tens of thousands of industrial enterprises have been closed down, those surviving are primarily ones specialising in exports of raw materials and energy production.² Even in the production of oil, which is Russia’s major industry, output has fallen by half over the decade — from 11.5 million barrels per day in 1987 to 5.9 m b/d in 1997.³ In 1998 Russia’s GDP contracted a further 5% and inflation once again surged to 85%.

The economy has been so badly devastated that large parts of it have reverted back to a barter system. With inflation averaging about 1000% in the first five years of reforms and touching a peak of 2,505% in 1992, the value of the rouble lost all meaning and so possession of commodities was more valuable than currency. Not only did most families resort to growing some food on family plots as they were unable to pay for it, but industry too resorted to barter.

With most industries facing a cash crunch and unable to pay either wages to their workers or taxes to the government, many resorted to bartering off the products coming off their production lines, in order to meet costs. It has been estimated that large enterprises carryout 80% of their business in barter.⁷ The share of barter in industrial sales increased from 5% in 1992 to 40% by end 1996.⁸

Regarding meeting their food requirements, it is estimated that tiny family plots provide a large part of Russia’s food and that roughly 56% of Russia’s working population grow some of their own food.⁹ Recently, at a demonstration, a nuclear scientist complained that he had no energy left for research, after working in the fields. Besides, food imports account for 75% of aggregate consumption.¹⁰

Besides, the value of the rouble, which was roughly equivalent to a dollar before the initiation of ‘reforms’, fell to 5,800 roubles to one dollar by end 1997.¹¹ With no faith in their rouble, even a large part of people’s savings were held in dollars. By 1997 Russians held about $20 to $30 billion of their savings in dollars – an amount roughly equivalent to the total amount of cash roubles in the country. ¹²

With the economy in this state, it is quite natural that tax collections by the government have been excessively low. This has been further aggravated by the fact that about 40% of business is in the hands of the mafia and tax evasion is estimated at $10 billion yearly.¹³ This has resulted in the government being in a perpetual state of bankruptcy. Tax collections barely reach 50% of the target. For example, in 1997 Russia’s tax system generated revenues of just 8% of GDP.... which is one-third of what is collected in other developed countries.¹⁴

In spite of large borrowings, upto 1997, each year’s budget has had huge deficits; it reached 20% in 1992 and has hovered around 10% in the other years.¹⁵

 With a high cost of borrowing, servicing the state debt, which has been growing by 40% a year, is itself swallowing up the bulk of government revenues. Its foreign debt stands at $180 bn while its domestic debt was $ 161 billion.¹⁶

Disregarding of a severe cash crunch the government has been defrauding the soldiers, public sector workers, employees and the pensioners of their wages and siphoning off this money to the big business houses. Rarely has a country witnessed such a gigantic fraud perpetrated by the government on its own employees.

The acute crisis of the Russian economic system appears total — on the food front, in industry and finance and in the government’s fiscal policies. This has been further compounded by the government’s unwillingness to rein in the black economy; prevent the huge flight of capital by big business, and an unwillingness to develop agriculture and industry, allowing a free reign to financial speculation.

And amidst this crisis-ridden economy came the crash of August 1998. Buoyed with a zero growth rate in 1997 (after witnessing an average annual negative growth rate of 10% in the 1990-96 period), Yeltsin and company began boasting that Russia had now turned the corner. Immediate plans were made to restructure the rouble that had been reduced to a scrap of paper... from 1-1-98 three zeros were dropped; i. e. from 6000 roubles to the dollar it was pegged at 6 roubles to the dollar.

But instead of the predicted growth and stabilisation what the people of Russia received was an even deeper crisis. This was triggered off by large withdrawals of portfolio investment in November-December 1997. In the August ’98 crash¹⁷ the rouble plunged to two thirds of its value from 6 to the dollar to 18 to the dollar (it is now 23 to the $); in the Moscow stock market share prices fell by 80% since the beginning of the year, consumer prices shot up 58% in just one month; short-term interest rates soared to 150% ... and added to all these woes the country faced the worst harvest in 30 years.

With this, Russia faced collapse on two fronts : financial and food. For both, the rulers turned to the West.

The financial crunch was faced by them as the Kremlin defaulted on its treasury debt of $40 bn (Treasury Bills are short-term borrowings of the government, sold to the highest bidder) and foreign reserves dwindled from $20 billion at the beginning of the year to a mere $8 bn by September ’98.¹⁸ So, with shrinking revenues, the rulers were forced into the arms of the IMF octopus for a huge $22.6 billion bail-out.

In the food front, with winter fast approaching, the situation was even more desperate..... the people of Russia were heading for mass starvation. Under these conditions,and desperate for survival, Russia borrowed a hugh 3 million tonnes each from America and Europe. So desperate was the situation, that Prime Minister Primakov, during his visit to India, even requested New Delhi’s help in getting food to tide over Russia’s terrible winter.

This is the pathetic state to which the land of Lenin and Stalin has been reduced. Even at the height of World War II the people of Russia did not face such horrifying conditions of existence. This is what thirty years of state monopoly capitalism and another decade of private enterprise has given the Russian people.

(2) The Lumpen Bourgeoisie

By the 1980s the Soviet economy has gone into a severe stagnation. Industry was in crisis, agriculture declined while a huge military expenditure continued to swallow up the bulk of the resources. Foreign trade which increased 4-fold in the 1970s actually recorded an 8% decline between 1984 and ’87. The crisis in agriculture resulted in food imports increasing from 9% of the total consumption in 1970 to 30% in 1985. The deepening crisis got reflected in a growing budget deficit which in just two years, between 1985 and ’87, jumped from 2.9% of GNP to 11.5% of GNP.... rising from 23 bn roubles in ’85 to 120 bn roubles in ’89 ¹⁹.

To get over this crisis Gorbachev sought to loosen the tight controls of the state capitalist system and reduce military expenditures. His hesitant ‘reforms’, finally led to the collapse of the Soviet Union, and the complete opening out of the Russian economy, through the Yeltsin coup, heavily backedby the West.

Within just three years 1,20,000 enterprises changed from state to private ownership. Privatisation led to companies going into the hands of well-connected operators who bought state properties for a song and stripped their assets, in the process becoming notorious oligarchs who owned the big banks, newspapers, mines, TV, etc. In another wave of privatisation in 1995 under the notorious loans-for-shares scheme, undertaken by the newly appointed Deputy Prime Minister, Anatoly Chubais, government’s stakes in some of Russia’s biggest and most valuable firms were parceled out to a coterie of well-connected banks at knocked-down prices.

State monopoly capitalism, on breaking up, resulted, not in a laissez faire economy, but private monopoly capital with the bulk of the wealth cornered by a handful of oligarchs.... called ‘clans’. These ‘clans’ are loose-knit groupings of industrial and financial interests, each with a clique of politicians at its head, a mass media outlet under its control and armed formations (state or private) at their disposal. These ‘clans’ are closely linked to the powerful mafias and also are intimately interlinked with international finance capital. They acquired state assets cheaply through rigged privatisations ... their banks grew fat on free floats of state money... they received big tax concessions from their political accomplices ... and they have ties with regional groups that operate along similar lines. Seldom in the history of contemporary capitalism have such a tiny number of rapaciously concentrated financial parasites risen so glaringly.

They comprise primarily the Group of seven bankers, a couple of oil magnates and a few politico-mafia conglomerates. To take a look at some examples of each. In the first category come individuals like Boris Berezorsky and Vladimir Potonin. Berezorsky, one of the most powerful political wheeler-dealers is the chairman of the Logoraz group. His economic reach extends into every nook and cranny of the Russian economy : all sectors of the media, real estate, petroleum and natural gas, banking and financial services, insurance, automobile manufacturing, food importing, whole-saling and retailing, construction, etc. Estimates on the size of his foreign investment holdings in West Europe and the US run into billions. Potanin, a leading politician himself, heads the Oneximbank group that controls 24 industries; it comprises one of the largest banks and has a group turnover of $10 billion. In the second category come people like the longest lasting prime minister of the reform period, Chernomyrdin. He is closely tied to Russia’s biggest conglomerate, Gazprom. After heading Gazprom as its chief from 1989 to 1992, he was instrumental in the privatisation of 60% of its capital. Gazprom, the only Russian industry listed on the Fortune 500 (1997), accounts for 6% of Russia’s GDP and supplies 25% of West Europe’s natural gas. Recently, it struck a strategic alliance with Shell. And in the last category comes Russia’s top candidate for the next presidential elections — Yuri Luzkhov, the Mayor of Moscow who has holdings in real estate, fast foods, oil, telecommunications, automobiles, etc in the Moscow area. He runs Moscow as his fiefdom utilising both a $8 billion official budget and a $4 billion ‘unofficial’ budget to run Moscow and build his empire.

Linked to these oligarchs/clans are the powerful mafias. As of January ’97 there were an estimated 4,000 mafia groups, employing roughly 6 lakh armed gangsters. The mafias control about 40% of Russia’s economy. Roughly half the Russian banks are linked to the Mafia and an estimated 80% of all enterprises pay an average of 10 to 20% of their profits as protection money. The mafia, in fact, grew and entrenched itself in the earlier Soviet period under Brezhnev’s rule. Its financial clout, acquired through embezzlement, black marketeering and trade in illegal commodities during the Brezhnev period, allowed the mafia to acquire an important position in the economy during privatisation. Now, the Russian mafia have become so powerful that they operate internationally, particularly in West Europe.

And finally, interwoven with these business houses and politicians, are the finance capitalists of the West... particularly the USA and Germany. In the crisis-ridden state of the world economy these imperialists are scrambling for a potential market, with an eye also on the vast natural resources of Russia. It was they who, in the first place, bank-rolled Russia’s transformation from state capitalism by pumping in heavy doses of capital. ... the bulk of which has come from Germany and the US. Besides, at times of severe crisis, the IMF has twice intervened with huge loans.

Next, Russia is importing from the West, not only the bulk of its consumer goods, but also vast quantities of food.

Third, the West has an eye on Russia’s vast oil and gas reserves, on which they expect to invest upto $60 billion. From the early period of privatisation the huge oil reserves on the Sakhalin Island have been tapped by foreign consortia. In November ’97 Yeltsin abolished the 15% ceiling on foreign ownership of Russian oil firms.... Promptly, the two most lucrative oil firms, Lukoil and Rosneft, were opened up for discernment.²⁰

Finally, Western capital is also seeking investment in the automobile and other consumer sectors. With the cost of labour under half that of Poland’s and Mexico’s and one-twentieth of Germany’s²¹ ... the West sees a big scope for making large profits in Russia. So far, this oligarchy and their chief political mentor, Yeltsin have been the most pliant accomplices of Western capital. This was most crudely brought out during the 1996 presidential election campaign. Not only did the Group of 7 oligarchs pump in $3 million into Yeltsin’s coffers and undertake a publicity blitzkrieg in his favour (for which they were rewarded with tax favours of $3.2 billion) — but the West too, backed Yeltsin to the hilt. In order to facilitate Yeltsin’s victory France and Germany lent Russia $400 million and $2.7 billion respectively and the IMF granted Russia a massive $10 billion loan — This was the second largest loan ever granted by the IMF, at that time.... and throughout the period prior to the election the IMF kept praising Yeltsin’s efforts in stabilising the economy.

(3) A Weak Imperialist Power

The new Russian big bourgeoisie who are organised into chaebol-style conglomerates have the capacity to compete on the international arena if they put their house in order. After all Russia has one of the richest natural resources in the world — with 40% of the world’s natural gas reserves, 6% of the oil, 25% of its coal, diamonds, gold and nickel and 30% of its Aluminum and timber.²² Greater protectionism against the onslaught of foreign goods through a new set of policies and devaluation of the rouble could help revive a collapsed manufacturing sector. In January ’98 with the merger of the two oil companies, Yukos and Sibneft, the new conglomerate has become the world’s third largest producer of oil. Also in the sphere of finance, with the collapse of 450 of the 1700 banks in Russia, a handful of them are emerging as powerful monopolies. Today the 100 biggest Russian companies produce 40 to 50% of its total GDP.²³

Yet today the Russian monopolies are relatively small by international standards. Besides, most are still in a state of stagnation and crisis. For example, overdue debts of enterprises continued to build up, and by end 1997 reached the huge figure of $127 billion .... i.e. more than twice the money in circulation.²⁴ In addition, due to the present crisis in the economy and the crashingstock market, the drop in market capitalisation of the top ten companies in just one year has been as high as 80% of their value, dropping from about $100 billion in October ’97 to just $11 billion in October 1998. Their total earnings were as low as $7.6 billion.²⁵ In Russia, some manufacturing sectors are virtually non-existent. Electrical goods production, with the exception of TV sets and refrigerators has folded up. The only quality national producer of washing machines, Vesta, went bankrupt two years ago. Most textile factories have shut down. Besides, the Russian business houses have a robber-baron mentality stocking away huge amounts abroad. It is estimated that in the first five years of reform, total capital flight has been $350 billion.²⁶ Besides, the Russian Oligarchy have been registering companies in free-tax havens. For example, 16,000 have been registered in Cyprus alone.... and in 1995 $20 billion from Russia passed through the Bank of Cyprus — i.e. three times Cyprus’s own GDP.²⁷ Besides, in Russia itself, with government’s interest rates soaring higher and higher, little incentive is left for investment in industry and manufacturing. Finally, in today’s ‘globalisation’ atmosphere with its ruthless cut-throat competition, the Russian bourgeoisie will find it very difficult to compete with their counterparts in America and Europe. Of course,like many of the other lesser imperialist powers they could develop in conjunction with one or the other major imperialist powers.

(4) The Russian State

Like its economy the Russian state has been enormously weakened compared to the days of the Soviet Union. The decline has taken place on two major fronts –– (i) in the Central Authority of the Federal structure and (ii) in its military power. Let us look at both these aspects:

In the Brezhnev era, not only was the freedom and autonomy of the nationalities that comprised the Soviet Union ruthlessly suppressed, but even those that comprised the Russian Federation, were crushed under the iron boot of Great Russian chauvinism. Thus a highly centralised, dictatorial authority developed at Moscow. With the weakening of the economy and state in the Gorbachev period the people of the various nationalities (of the Soviet Union and within Russia) broke into revolt and the Soviet Union collapsed. Russia itself, sought to maintain itself as an entity, by diffusing these struggles and striking a compromise through the Federation Treaty of 1992. In spite of this, Chechenya waged an armed struggle against Russian authority and has defacto separated from the Russian Federation.

With the Federation Treaty the homogeneous Russian state has been enormously weakened. Russia, with a vast land mass covering 11 time zones, has now been divided into 89 separate areas. These areas, as per the new Treaty comprise :

The Regions and Territories were run by Governors appointed by the President of Russia. However, even here, since 1997 Governors are no longer appointed, but are elected by the local populace.

Today, so thinly is central policy spread that, save in defence and foreign policy, the Federal Centre has little power. Besides, the threat of more Chechenyas looms large over the Kremlin.

The mainstay of Soviet imperialism was Moscow’s mighty armed force and its deadly nuclear weaponry. Today, though it continues to have a large stockpile of 22,000 tactical nuclear weapons scattered all over the country, it is a much weakened force. Both in military hardware and in the fighting ability of its forces there has been a significant decline. Here, we shall consider both these aspects. The following chart²⁸ gives a rough picture of this decline :

We see that the collapse of the Russian economy has also badly hit its armed forces. This can be seen both in the realm of hardware and of personnel.

Due to the severe cash crunch, procurement of all military weapon-systems has fallen almost to zero, and the services are getting 15% to 20% of what they need just to replace that which has been lost or taken out of service. In 1995 the air force asked for 40 fighter planes, but got only six. For the next two years the army has not purchased a single new tank or aircraft. Even the mainstay of the arsenal, the 800 land-based ICBMs, carrying ten warheads each, are aging and are kept on a low-level peacetime alert. Only about 6,000 of the 11,000 warheads operational in 1990, are functioning today.

Besides, in conventional military warfare, upgradation of technology is a key factor for superiority in battle. At one time the Soviet Union had a nearly ten-year lead over the West in metallurgy, petroleum engineering, super conductivity, laser research, astrophysics and space engineering. But today, military research and development has suffered the same kind of cutbacks and lags behind the leading NATO countries by a decade. Thousands of nuclear and other scientists have sought employment in the West and even in the oppressed countries. Many are eking out a living as taxi-drivers, hawkers, etc. In October ’98 the US, in order to prevent them from selling their know-how to the oppressed countries, announced a $30 million programme to ‘rehabilitate’ jobless scientists in Russia’s nuclear cities. The Council of Europe’s Education Commission estimates that Russia loses $50 to $60 billion every year through brain drain. The government is planning to further cut 45,000 jobs in the nuclear sector.

Russia has been trying to upgrade its technology but lacks the funds to do so. In end 1998 it released photos of the most advanced MFI jet-fighter — equivalent to the US’s latest F-22 Raptor — on which it has been doing research since 1980. It is yet to conduct its maiden flight as there are no funds to develop it. More important, in early 1999, Russia announced the development of its latest and most advanced missile. The Topol-M ICBM is relatively light and can be moved around on vehicles and carries a single warhead (legal under START-2). Russia plans to build 40 such missiles by end 2000, but is, as yet, unsure from where it will get the necessary funds.

In addition to the main military of over one million, Russia has concentrated on developing an elite force of the Interior Ministry. This is a crack force comprising of 2a lakh troops and 3 lakh armed police. Also, it is upgrading its Strategic Rocket Force into a ‘Missile Special Force’ which will develop as its major deterrence factor in case of full-fledged war. While the army goes without pay for months, these special forces are always paid in time.

The army itself is in a total state of demoralisation, as was highlighted by its humiliating defeat in Chechenya. Throughout the two-year conflict, the General Staff had problems finding combat-ready units to fight in the region. Major sections of the army do not get paid for months.... food is scarce even for Moscow-based divisions, let alone for those in far-off regions.... under-financing has reached such proportions that soldiers are going hungry and survive by pawning wares on the streets.... one-third of the soldiers are ‘underweight’... morale of the army is low and indiscipline rife.... every year about 5000 conscripts get killed or commit suicide as a result of widespread hazing²⁶ (i.e. harassment with overwork and bullying) and a large number of officers have fled to the private sector.

Due to the big cuts in the defence budget.... the army’s 186 divisions of a decade ago are down to 30.... the number of officers have been reduced from 3863 in 1992 to 2632 in 1998.... even training levels have been lowered due to a lack of resources... today pilots are flying only 25 hours per year, compared to 200 hours in the West. In spite of these severe cuts, there are plans to further slash the defence budget. In 1998 Yeltsin suggested that the defence budget be further reduced from 5% of GDP to 3% of GDP by the end of the century.

With conventional forces in decay, military options will become increasingly limited and Russia will be forced to depend even more on its Internal Troop Units that fared so badly in Chechenya. Russia will lack strategic options between low intensity operations by its crack troops of the interior ministry and full nuclear response by its missile special force. The Nuclear threshold is thereby lowered. With the focus being on the well-paid forces of the Interior Ministry, the Government’s emphasis appears to be on preparing for disturbances within the country and in neighbouring regions while sustaining their nuclear umbrella as a low-cost defence mechanism. Russia’s drop in expenditure on military research, has much weakened its military power in an age where most developed countries rely more on high-technology striking capacity rather than bulky forces.

(5) Geo-political Significance of Russia

From a mighty superpower during the Brezhnev era, Russia today is reduced to a crippled power desperately attempting to at least, keep within its fold some countries of the erstwhile Soviet Union. It has lost most of East Europe and other countries of the world to the West. It has thus been considerably weakened as an imperialist power with reduced spheres of influence now confined to some of the CIS countries, what remains of Yugoslavia, and to some extent, in India, Iraq, and a few other countries. Both in the number of troops stationed abroad and in arms exports, Russia has significantly declined vis-a-vis the other major imperialist powers.

Today, the bulk of its forces stationed abroad are in the CIS countries. Till a year back Russia had 63,000 troops stationed in the CIS countries and only 2,400 in the rest of the world (Vietnam, Cuba, Mongolia, Syria, Africa). It has provided 1,500 troops to the UN ‘peace-keeping’ Forces. So, it appears, its main focus is today on the CIS.

As far as arms exports is concerned, today the bulk is monopolised by the US and Europe. In 1996, of the total global arms exports, the US accounted for 43% and the EU had 41%.³⁰ From being the largest exporter of arms in the world in 1987, Russia accounted for barely 10% of the total in 1995. The following table³¹ will give a picture of the relative changes in arms exports of the major countries :-

Total Arms Exports ³¹

That too, a part of Russia’s arms exports comprises of equipment to be disposed off, in return for desperately needed cash /foreign exchange. In fact the bulk of its arms exports goes to India, whose defence purchases from Russia are equivalent to that of the rest of the world taken together. Much of the balance is sold to China, with which it is seeking a closer alliance.

Today, the major focus of its contention with the West, is focussed on the ex-Soviet countries, against the NATO’s expansion eastwards, and to some extent over Iraq and the middle east. On most contentious issues with the USA, outside of those concerning NATO and the ex-Soviet bloc, it rarely goes much beyond the stand taken by Europe, or, particularly France. So let us now focus more on Russia’s relations with the ex-Soviet bloc and its problems with NATO :

Due to three decades of domination Russia still has strong interests in these ex-Soviet countries. In spite of huge investment by the West in this area, Russia still accounts for 50% of the overall trade turnover of the 11-member CIS whereas for Ukraine, Kazakhstan and Belarus the share of Russia exceeds 70% of their foreign trade.³²

Russia, besides stationing 63,000 troops in the area, has sought to tie up the area in a network of agreements and treaties. On the other hand the West has poured in vast amounts of funds to tie up the area in a web of economic and trade relations. The battle with other imperialists, for the area, is intense specifically since vast deposits of oil and natural gas have been discovered in the Central Asian region.

Soon after the collapse of the Soviet Union, Russia initiated the Commonwealth of independent states in order to tie these countries to the chariot wheels of Russian imperialism. This was followed, in May 1992, by the Tashkent Security Pact, which was initially signed by Russia, Uzbekistan, Tajikistan, Kyrghyzstan, Kazakhstan and Armenia and later joined by Azerbaijan, Georgia and Belarus. (Earlier this year Uzbekistan left this pact). Then it tried to tie up the oil-producing countries of the region in an OPEC-type agreement. It also attempted to hold a summit of five nations (Belarus, Kazakhastan, Kyrgyzstan, Tajikistan) to build a free trade zone amongst them. In Georgia it is suspected that Russia was behind the two assassination attempts of the pro-US president and was said to have supported the Abkhazia armed conflict. Also, while acting as a mediator in the armed conflict between Azerbaijan an Armenia, Russia secretly supplied $1 billion worth of arms to Armenia.

These attempts have not achieved much success since Russia’s crumbling economy has been no match for the West’s capital offensive in the region. In the past few years Russian investment in the CIS accounted for just about 1% of all foreign investment.³³ Trade with CIS has declined from 63% of Russia’s foreign commodity turnover in 1990 to just 21% in 1997. The present collapse of the Russian economy leading to crises in many of the ex-Soviet countries, has made the latter look even more towards the West. Besides, the Western imperialists have already taken control over much of the oil and natural gas deposits found in the Caspian Sea area. Utilising the conflict over gas exports between Russia and Turkmenistan, the MNC, Shell, struck a deal with Turkmenistan to build a pipeline to Turkey through Iran. While Russia has desperately been seeking to strike agreements with the Caspian Sea area countries that oil be piped to Europe through Russia, the US is pushing the Georgian route. One important objective of the US in the region is to drag Georgia away from the CIS and put under Washington’s full control the Azerbaijan-Georgia pipeline.

In this desperate tug-of-war Russia only seems to have won out with Belarus, as the two countries have agreed to merge into a single entity by mid-1999. While the Baltic countries, Georgia, Azerbaijan and Uzbekistan, appear to have swung more towards the West, the battle for Ukraine, the largest country of the ex-Soviet bloc, has intensified. While, on the one hand it, in 1997 established close ties with NATO, on the other, in 1998 it signed three treaties with Russia.

It is clear that Russia will not easily give up its backyard to the western imperialists. Yet, maintaining it, is proving to be an uphill task.

No sooner had the Warsaw Pact collapsed than NATO sought to fill the vacuum. In January ’94 the partnership for peace (PFP) was launched by NATO which offered all the former Warsaw Pact countries much closer military links, but no guarantee of eventual membership. This was followed by the North Atlantic Cooperation Council (NACC) and a large number of joint military exercises. In June ’96 plans were made for the expansion of NATO giving membership to Poland, Hungary and the Czech Republic by 1999 and then to ten other countries of Eastern and central Europe in the following decade.

This decision which totally bypassed Russia, and in fact sought to isolate it within its own periphery came as a shock. The Russian ruling elite, after kowtowing to the West, expected cooperation from NATO or at least consultation before entering their ‘sphere of influence.’ Russia reacted with much threatening noise, but little action. Dependent heavily on Western money, Yeltsin and the ruling gang, were easily quitened by a Western package deal. In order to appease Russia, the West offered more financial assistance (and promptly released a $697 million installment of the $10 billion IMF credit)³⁴; a review of the CFE Treaty in favour of Russia, granting Russia special consultative status in NATO; and, admission into the G-7. In return for such sops Russia accepted the expansion and on May 27, ’97 quietly signed the charter setting up the NATO-Russia Joint Permanent Council.

In return for this council, with no real power, Yeltsin not only pledged not to target its nuclear weapons at Europe, but also went so far as to withdraw the bulk of his forces based near Europe (adjoining Poland) in the Kaliningrad Military District.

But a major sphere of conflict in East Europe continues to be in the Balkans where the Russians back the Serb nationalists in what remains of Yugoslavia, while the West has aggressively pushed its interests in the other countries of that region. But here too, Russia had quietly acquiesed to the November ’95 Dayton Accord and also to the dispatch to Bosnia of a huge 30,000 NATO ‘peace-keeping’ force soon after the Accord. But of course, the Slav nation continues to remain as the main pocket of Russian influence in East Europe.... and with NATO’s military threats to it over Kosovo, Yugoslavia has infact sought membership to the Russia-Belarus union.

The tensions with NATO continue, but Russia has, as yet, been too weak to aggressively assert itself in the face of blatant provocation and open military threats to Yugoslavia by US and NATO forces. Though, with the rise of Primakov and a greater say of the Duma revisionists in the administration, contention with other imperialists has somewhat sharpened (as over Iraq) and Russia is focussing on strengthening its relations with its old ‘allies’, it is, as yet, not able to significantly challenge the US, even in a place of outright aggression, like Iraq. At the international plane it is seeking closer alliances with China and some oppressed countries, but its distressing economic plight gives little confidence to those countries with whom it seeks ‘strategic alliances’. Besides, its goods are uncompetitive in world markets.

Having seen Russia’s status in the world and its changes in its internal economic and political structures, let us now turn to the plight of its people, the social conflicts developing and the potential for revolutionary change.

(6) Destitution and Growing Inequalities

Russia is today a land of unpaid wages, poverty, hunger, starvation, disease, alcoholism and premature death.

Today, the wage arrears of $13 billion effect 65 million people. A survey in November ’96 found that 62% of the people have not been paid on time. In just one year, the wage arrears as a percentage of monthly GDP rose from 14% in 1996 to 26% in 1997.³⁵ According to the official Russian Centre of the Standard of Living, 79 million Russians (53%) live in poverty. The average salary today buys only two-thirds as much meat as in the pre-reform days and about one-third as much milk. The president of the Russian Medical Academy, Dr. Valentine Petrovsky, said that in 1996 Russians ate 30 to 60% less than 5 years earlier.... and in terms of nourishment Russia ranked 36th in the world. Russia’s death rate has soared and is now 1.6 times higher than the birth rate - - - the highest ratio in the world. Life expectancy for men, in the five years since 1991, has declined form 65 years to 58 years, that places Russia on par with Kenya.³⁶

In Russia today TB and alcoholism are ravaging the population. There are 3 million TB cases with 1a lakh new ones each year. Roughly 10% of the entire population are alcoholics, and 80,000 die every year of excess drinking.

While the majority of the workers, middle class, professionals, etc, have been pushed into extreme poverty, a handful of elite have accumulated enormous wealth. Not only have big business and the mafia stacked away billions abroad, but the politicians and bureaucrats continue their Brezhnev-era style privileges. An example of these inequalities is best portrayed by the fact that the once first Deputy Prime Minister, A. Chubais, got an annual income equivalent to $4 lakhs.... and, of course, this does not include the vast sums received for favours bestowed on business, as was revealed in the press later. 2% of the top income earners gobble up 57% of the nation’s assets. The poorest 10% of the population accounted for just 2.6% of money income.³⁷

With these terrible conditions of life and the increasing inequalities a rising tide of protest is growing throughout the country.

(7) Reform or Revolution ?

Continuing strike activity has become a common feature of the Russian landscape. The most militant of which have been those of the coal miners. In 1998 strike activity reached such a pitch that the Kremlin threatened to use force. Bypassing the revisionist leadership, wild-cat strikes to protest wage arrears were on the rise since May ’98 when hundreds of coal miners blockaded three railroads, cutting off supplies to several large regions. In early August ’98 striking miners caused an acute nuclear safety threat in the southern Urals region when they blockaded a local power plant that supplies electricity to Mayak - Russia’s only nuclear-waste processing plant. Strikes also spread to the municipal workers of Vladivostok, Russian air-traffic controllers, etc.... In Sakhalin, protesters said they were owed $16 million in arrears; in a rally in a city near Vladivostok, nearly the entire adult population turned out in support. For over two weeks 200 miners of Sakhalin picketed the Moscow headquarters. Loss in man hours due to strike activity in Russia increased from 2 lakh man hours in 1992 to 5.7 million man hours in 1997.³⁸

Strikes of miners and workers of the oil industry, the agricultural workers, the teachers, doctors, scientists... have spread to a growing unrest in the armed forces. In fact the entire country is ripe for an explosion ... what is lacking is the forces to lead it.

The majority of the so-called communists in Russia are seaped in revisionism. Four decades of anti-Mao propaganda, by the successive rulers, has made it all the more difficult for genuine communists to develop in Russia. While the official Duma-dominated ‘communists’ seek a market ‘socialism’, a number of other ‘communist’ groupings are merely for restoring the earlier Brezhnev-type state capitalist rule. Both only seek to resurrect the glory of the old super power status of the Soviet Union. None of them is for revolution. The West’s dislike for the Duma-based ‘communists’ is not because they are communists but because they may not be as pliable to Western interests and may seek more competition and contention in the international arena. But, as these revisionists betray the masses in their struggles, their support is fast dwindling. This was reflected in the October ’98 rallies in which one million people participated, compared to 1.8 million a year earlier.

Without militant leadership the masses are turning to individual acts of violence and registering their protest in varied ways. This trend has particularly grown in1998. In a survey conducted by the Russian Independent Institute of Social and National Problems, 8% of the respondents said that they were prepared to take up arms.⁴³ Without a genuine communist leadership, people are turning to spontaneous forms of protest, without a definite direction.

But the writing on the wall is clear. People will soon realise the futility of individual acts of violence: these are bound to develop into more organised forms. In Stavropol, in South Russia, anonymous leaflets announced the establishment of a ‘Union of the Desperate - an underground association of citizens’, which vowed to wage "a guerilla war against directors, managers and financial directors, of enterprises who owe salaries and wages .... setting on fire apartments, cars, dachas and cottages...". Also wildcat mass strikes are growing all over the country. In addition, there is severe unrest in the armed forces. Obviously, the objective conditions are ripe for great revolutionary advances in Russia, what is lacking are the subjective forces to lead it. But, given Russia, great history ... as the first country to lead a successful revolution, and as the birthplace of great revolutionaries like Lenin and Stalin, it will not be long before such a force stands at the vanguard of the Russian proletariat.

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