The State of the (Former Soviet) Union

Meeting Report
Russian and Eurasian Program Vol. 2, No. 1, January 6, 2000

American perceptions of Russia's political and economic condition differ greatly from Russian realities. This was a central theme in the presentations of Carnegie Senior Associates Michael McFaul, Anders Åslund, and Thomas Graham, yet each displayed strikingly different views of what a realistic assessment of Russia should look like.

Michael McFaul

McFaul argued that while Americans tend to demonize or valorize Russian leaders, neither view is fully correct. He emphasized that a model of polarized politics -- i.e., hardliners versus reformers, communists versus democrats -- ceased to be applicable to Russia after the 1996 presidential elections. However, most American pundits have failed to grasp this. "The glass is half empty or half full" perspective is simply bad analysis, argued McFaul. When analyzing contemporary Russian political developments, it is possible to "actually have good and bad things happen at the same time." Complex is the only ample description of the Russian transition.

To prove his point, McFaul discussed the political campaigns leading up to the December 19, 1999 State Duma elections. Rather than a polarized clash, numerous political battles occurred. Out of these struggles, two different types of political associations emerged.

First, there were several major parliamentary parties which had been mainstays, under one name or another, of the Russian political scene for most of the 1990s. These included the Communist Party (CPRF), the Union of Rightist Forces (CPC), Yabloko, and the Liberal Democratic Party (LDPR). Well-defined ideologies and electorates, static levels of voter support, and leaders with little chance of becoming president characterized these parties. McFaul predicted that these parties have become longstanding political organizations. They will likely compete in the next State Duma elections.

Second, there were political associations formed to promote aspiring presidential candidates, namely Fatherland-All Russia and Unity (MEDVED). These coalitions exhibited the opposite characteristics of the parties mentioned above. They lacked an ideology and a well-defined electorate. Voter support for these parties was extremely dynamic, dropping dramatically for Fatherland as the pre-election period progressed and skyrocketing for Unity. A serious presidential candidate was associated with each party. Considering these parties mere vehicles for presidential politics, McFaul doubted that either will last until the next State Duma elections.

McFaul further elaborated on his theme of simultaneous positive and negative trends as he contemplated the condition of democracy in Russia. The consolidation of at least four major political parties is a positive sign, for example. However, the sophistication of the electorate displays reason for both hope and worry. While demographic segments of the population with strong attachments to a party showed little susceptibility to media manipulation, voters in poor and rural regions proved very impressionable.

McFaul also worried that proportional representation in parliament combined with a strong presidency allows the executive branch's power to remain unchecked. Either the strength of the presidency should be reduced or proportional representation in the Duma should be abolished.

In terms of presidential politics, McFaul argued that Boris Yeltsin would have set a better democratic precedent by serving his term out and holding elections in June 2000 as scheduled. But, he admitted, judgment of Yeltsin's actions is relative; Nelson Mandela, the father of democracy in South Africa, also hand picked his successor.

Finally, Putin himself epitomizes the complexity which McFaul finds in contemporary Russia. Some see in him a dangerous autocrat; some, a democratic reformer. Recalling the similar predications made about Yeltsin when he took office in 1991, McFaul predicted that Putin is likely to exhibit both tendenceis over the course of his time in office.

Anders Åslund

Åslund argued that the American perception of Russia as a hopelessly corrupt, economically-failing country is blatantly false. He sought to debunk five myths about Russia.

First, he addressed the belief that Russia's economy is "down and out." In actuality, Russia's GDP grew at approximately two percent in 1999 despite IMF predictions that it would fall nine percent. Industrial growth topped eight percent. Åslund further pointed out that pro-government parties could not have done so well in the recent parliamentary elections if not for a "feel good" attitude among the Russian populace.

Second, he challenged the argument that these economic gains are only due to increased oil prices and the August 1998 devaluation of the ruble, which boosted import-substituting industries. On the contrary, substantial structural economic changes have occurred. Between August 1998 and August 1999, barter dropped by one-third. Arrears of most kinds have fallen by at least one-half. For Åslund, the August 1998 crash turned out to be the "beating over the head which Russian businessmen actually needed." Business relations are dramatically being restructured as businessmen recognize that they now face true hard-budget constraints.

Third, he disputed the claim that Russia does not collect enough taxes and that the federal government is losing power to the regions. Russia's total state revenue was 31 percent of GDP in 1999, nearly equal to revenue collected in the United States. Russia has a primary government surplus of two percent of GDP. If anything, Russia collects too much in taxes he said. The only major problem is Russia's Soviet era debt, part of which, according to Åslund, the West should write off. Moreover, the federal government is not losing power vis-à-vis the regions. In 1998 federal government revenues were 9 percent of GDP; in 1999, over 13 percent. This increase came at the expense of the regions' share of revenue.

Fourth, he found no evidence to support recent comparisons of Putin to Milosevic. Putin's speeches are about market economies. He came to Moscow in 1996 at the behest of the reformer Anatoly Chubais, and his current confidants on economic policy are also Chubais allies. While Putin often talks about a strong state, Åslund argued that this only reflects a desire for a functioning state, not authoritarianism.

Fifth, he objected to the claim that the new Duma will not be able to carry out substantive reforms. The old Duma featured a Communist majority whereas Communists will probably have around 32 percent of the seats in the new Duma. Without the Communists, Åslund predicted substantive tax reform and land reform this year.

Tom Graham

Graham countered Åslund's optimism about an economic upturn and a democratic Putin regime. He argued that the central issue in Russia is not reform, but power. Graham emphasized that Putin is well aware of the socioeconomic collapse of the 1990s and the consequent weakening of the Russian state. Putin wants to recentralize Russian power, as has repeatedly occurred in Russian history after a period of chaos. According to Graham, this is cause for concern. In the past, such recentralization has led to authoritarianism, xenophobia, and state interference in the economy.

These fears are already becoming apparent. Yeltsin's resignation, though constitutional, was hardly democratic, Graham noted. Putin has based his power on anti-Western rhetoric and the war campaign in Chechnya -- in other words, on xenophobia. And Putin speaks of a state which "guides and directs" society, insinuating a greater role for the state in the economy.

Graham further questioned Putin's reformist credentials in light of his past. He warned that while St. Petersburg, Putin's domicile in the early 1990s, was a hotbed of reform activity, it was also highly corrupt. Once in Moscow, Putin worked under Pavel Borodin, the Kremlin's property manager, who recently has been associated with the Mabatex scandal. Then, before becoming prime minister, Putin was head of the FSB, the successor to the KGB. Despite his association with reformers, Graham concluded, none of his actions distinguish him as an anti-corruption fighter. Consequently, Graham cautioned that the Clinton administration and other Western onlookers should not be so quick to embrace him as Yeltsin's successor or to view his ascension as a turning point in Russian reform.

Even aside from Putin's personal characteristics, Graham sees little reason to believe that Russian democracy is flourishing. Once elections are over, people in Russia have very little control. Civil society is extremely weak. There are no more civic associations in Russia today than ten years ago under Mikhail Gorbachev.

Finally, even if Putin is a reformer, he will face opposition from regional and economic elites. In order to succeed, he will have to carefully pick his fights, pit the "oligarchs" against one another, and hope to create some maneuvering room for himself. Graham continued his wary tone as he concluded, stating that "Russia's journey away from its Soviet past is going to be long, its going to be messy, and its going to be uncertain."

 Summary by Jordan Gans-Morse, Junior Fellow with the Russian and Eurasian Program