Looking back with a generous dose of humility.
- By David E. Hoffman
David E. Hoffman covered foreign affairs, national politics, economics, and served as an editor at the Washington Post for 27 years.
He was a White House correspondent during the Reagan years and the presidency of George H. W. Bush, and covered the State Department when James A. Baker III was secretary. He was bureau chief in Jerusalem at the time of the 1993 Oslo peace accords, and served six years as Moscow bureau chief, covering the tumultuous Yeltsin era. On returning to Washington in 2001, he became foreign editor and then, in 2005, assistant managing editor for foreign news.
Yevgeny Bushmin seemed to embody all the promise of Russian democracy on a cold December day in 1995 as he campaigned for reelection to the lower house of parliament. When we met, Bushmin was 37 years old, had made it as a young businessman in the last years of the Soviet Union, had become the first chairman of the fledgling stock exchange in the city of Nizhny Novgorod, and now in a suit, black cloth coat, white scarf, and fur hat, was seeking a second term from District 122.
He had a reformist record in the Duma, but could see the tide was running the other way. In Nizhny, called Gorky in Soviet times and best known as the internal exile of Nobel-winning dissident Andrei Sakharov, the huge military-industrial complex stood idle, the workers uncertain about their future. People were hurting so badly the word "democracy" itself had come to be associated with hardship.
At 9:15 a.m., we arrived at the gate of a sprawling defense factory, which once made laser equipment but was now quiet and empty. This was only Russia’s second post-Soviet parliamentary election, and the workers we met were sour. "I’m not allergic to democracy," Bushmin told them. "The only advice I have is let’s give it a different name and keep doing it."
And indeed, a day spent watching Bushmin field complaints from angry, sullen voters left me still optimistic that despite the hardships, democracy might take root in Russia after seven decades of Soviet rule. I wrote in the Washington Post at the time that Bushmin’s race highlighted the "fascinating, wobbly, yet striving character of Russia’s young democracy."
A decade and a half later, however, Russian democracy is flat on its back. When parliamentary elections are held this December, there will be no individual districts like the one where Bushmin campaigned. They were abolished in favor of a party-list system that effectively makes it impossible for independents to win. Governors, once elected, are for all practical purposes now appointed by the Kremlin. While in 1995 there was a vibrant if uneven free press in Russia, today the main broadcast channels — through which 90 percent of people get their news — are all firmly under the Kremlin’s thumb. Over the last decade, Vladimir Putin, as president and then prime minister, has established a monopoly on politics and the policy it drives.
It was not the outcome I expected while covering Russia’s transition as the Post bureau chief in the 1990s. Russia zigzagged from oligarchic capitalism to crony capitalism, and in politics from proto-democracy to soft authoritarianism. All of us who witnessed the events of those years — journalists, scholars, government officials, businessmen, and others — ought to ask ourselves: Why did Russia turn out this way? What did we get right, and what did we get wrong?
For the most part, Russia had to choose its own direction, and the West’s ability to change that path was always somewhat limited. No amount of aid, loans, or well-intentioned advice was going to endow Russia with a broad consensus about its identity, direction, or place in the world, all of which are still in play. But to the extent that outsiders could help, did the West try too hard to remake Russia in its own image? Were the basic choices — democracy and free markets — somehow wrong or alien for Russia? Were there alternative paths? These questions have reverberated for years.
The answers could be important for a new generation of democracy activists, particularly those in the Arab world. The protesters who gathered in Cairo’s Tahrir Square in early 2011 will undoubtedly be facing many of the same frustrations that unfolded in Russia 20 years earlier. There are lessons to be taken from the collapse of Soviet communism. History may not repeat itself, but it can certainly be reusable. It should be examined with a generous dose of humility.
Back in the 1980s, a lone economist, Vitaly Naishul, had dared speculate on the future after Soviet shortages and central planning. His manuscript, Another Life, was first published in samizdat, with underground copies passed hand to hand. The work documented the absurdity of the Soviet command economy and suggested how, one day, capitalism might bring Russians "another life," an abundance of choices and a new prosperity.
Remarkably, that new life came to be. Soviet leader Mikhail Gorbachev loosened the bonds of political debate, giving rise to freedoms most people had never known and unleashing centrifugal forces that ultimately led to the Soviet Union’s demise. Then Russian President Boris Yeltsin liberated prices, property, and trade all at once in what was called "shock therapy," a lunge toward a free market economy.
Yeltsin promised in his major economic address on Oct. 28, 1991, that "people’s lives will gradually get better" — within a year. It didn’t turn out as he hoped. By the time of Bushmin’s 1995 campaign, Russia was in the throes of a wild transition to some unknown future. Hyperinflation had wiped out the savings of many, the social safety net was in tatters, pyramid schemes proliferated, and superrich tycoons were becoming the new power brokers.
The rollicking course did not endear people to the original band of radical, young Russian economists, led by Yegor Gaidar and Anatoly Chubais, who were aided and abetted by Western advisors. This brain trust shared fundamental assumptions. One was a strong conviction that Russia, despite its backwardness and history, would be fertile soil for a modern market economic system — that Russia was not an exception to the basic rules of human behavior. Given incentives, people would know what to do; they would respond. Chubais and the other reformers were deeply influenced by Austrian economist Friedrich von Hayek, one of the most trenchant early critics of socialism and central planning.
This faith in market choices was also reflected in the Western media. The Economist published two articles in the early years that were markedly influential and remain benchmarks of the mood. One, from 1995, was titled "A Silent Revolution" and declared, "The basic institutions of a market economy have appeared with astonishing speed." Russians, the article found, are "ambitious and avaricious, they travel freely abroad, and they are not easily frightened." The power of the state, it said, "has been replaced by the power of money." Russian shops, once near empty, "have changed out of recognition."
Another big assumption shared by the Russian reformers and their Western advisors was about the central role of private property. They believed the simple act of putting it in private hands would transform Russia. In the other Economist article, a 1994 piece, "Sale of the Century," the magazine touched off a frenzy, arguing that fortunes were just waiting to be made from privatization. The country’s assets, from aging factories to oil and gas deposits to biscuit makers, were stunningly cheap.
William Browder, who later became the largest foreign equity investor in Russia, was working at Salomon Brothers in London at the time. He was having trouble drumming up interest in Russia inside the firm. When I was researching The Oligarchs, my book on Russia’s new capitalist aristocracy, Browder told me that right after the Economist article appeared, there was a flood of interest in those cheap assets in Russia. "I was sitting on the trading floor and all of a sudden all the managing directors are around my desk. ‘Bill,’ they said, ‘interesting stuff you are doing there. Can you get us some Lukoil?’"
Chubais, the privatization chief, believed that the most important thing he could do would be to rapidly shift the property out of the hands of the state. He did not really care to whom the riches of Russia were distributed, as long as they were private owners. Chubais told me that he believed the market would sort out the best from the worst.
That was the theory, but reality did not unfold quite so smoothly. The first wave of owners in the 1990s proved brilliant at the most crude attempts to extract rents from the state for quick, immense profits. Tycoons bought oil at low, state-controlled prices and then sold it abroad for several times more. Presto: big money. Later, in the infamous loans-for-shares privatization, some of Russia’s most valuable oil and mineral companies were sold off cheaply at a time when the state desperately needed cash. These new owners were not turning into modern manufacturing moguls. They were getting rich through insider deals and exploiting the weak government.
In one important way, privatization was a resounding success. At its peak, some 70 percent of the Russian economy was put in private hands. But Russian capitalism was born into a vacuum without effective laws and a state that could not enforce those that were on the books. Stealing and cheating were part of daily business, and violence a tool of the trade. All sorts of abuses, including gangland-style murder, went unpunished.
Some assumed the new businessmen would, over time, push for a better legal system if only out of self-interest. The Economist predicted, for example, "Many of the robber barons … will use their now considerable power to lobby the state for regulation that will protect their gains." And it happened. After the 1998 economic collapse, they began to clean up their act as a way to attract Western investment. Chief among them was Mikhail Khodorkovsky, boss of the oil giant Yukos, who became more transparent about the ownership of the company and issued Western-style accounts as he proffered a chunk of the empire to ExxonMobil and Chevron. Khodorkovsky also played in politics, bankrolling parties, though he told me at the time it was with the Kremlin’s explicit approval.
I’m not sure how far this nascent evolution would have gone, but in any case Putin turned on Khodorkovsky in 2003 after the tycoon started raising questions in public about high-level corruption. Khodorkovsky was arrested, and two sham trials followed, as well as the dismantlement of Yukos.
Putin did enjoy popular support, and he could have created a law enforcement and judicial system that was independent and respected. But he did not want to. Instead, he brought to power the siloviki, men from the security services who shared his penchant for control.
The siloviki did not break the link between wealth and power created by Yeltsin and the oligarchs; rather, they took it over. One of Putin’s close advisors, Igor Sechin, became chairman of Rosneft, a state-owned oil company that gobbled up Yukos’s assets. It was the same system as before, just with different actors. Dmitri Trenin of the Carnegie Moscow Center concluded, "Private and corporate interests are behind most of Moscow’s major policy decisions, as Russia is ruled by people who largely own it." Under Putin, he said, the government has been turned into "Russia Inc., with top Kremlin staffers and senior ministers sitting on the boards of various state-owned corporations and taking an active interest in their progress and profits."
Putin’s handpicked successor, Dmitry Medvedev, also paid lip service to the rule of law, vowing to end the country’s "legal nihilism," but he has made little progress. The system of iron bonds between the wealthy and the powerful is deeply entrenched in Russia today, and what might seem a conflict of interest in the West does not even raise an eyebrow in Moscow.
On the wall in his White House office, Michael McFaul likes to point to a photo of a huge crowd, in which maybe 200,000 people are squeezed into a square in central Moscow. It was the spring of 1991. The photo captures the flourishing democracy movement during Gorbachev’s last year in office. McFaul, on leave from Stanford University to serve on the U.S. National Security Council staff, told me the photo serves as a reminder that governments and policy analysts often focus too much on a leader and not enough on the deeper currents of change running through society. Gorbachev had unleashed forces that were about to overwhelm him, but in 1991, the West was still watching Gorbachev instead of the street.
After the Soviet collapse, U.S. President Bill Clinton made the same error, viewing Russia through the imposing presence of "Ol’ Boris" Yeltsin, one pol to another. Had Clinton taken a wider view, he might have done much more to directly strengthen civil society, the glue that connects the rulers and the ruled, which Yeltsin never understood and neglected. Strobe Talbott, who served as deputy secretary of state in the Clinton administration, offered a telling anecdote about Clinton’s view in his memoir, The Russia Hand. Clinton was visiting Yeltsin six months after the Russian president left office. "You changed Russia," Clinton told him. "Russia was lucky to have you.… I was lucky to have you. We did a lot of stuff together, you and I." When Clinton got into his limo and pulled away, he added, "That may be the last time I see Ol’ Boris.… I think we’re going to miss him."
In the early years, many who worked in Russia shared a conviction that if Russia created solid, sustainable institutions, such as electoral laws and a new constitution, everything else would fall in place. In retrospect, this faith may have been misguided. The 1993 constitution gave the Russian president strong powers. In Yeltsin’s hands, it was an unruly democracy. But the same constitution did not prevent Putin from steering Russia in the other direction. Both presidents used the same document.
Russians went to the polls repeatedly in the years after the Soviet collapse, with voter participation rates far greater than in the United States, but Yeltsin, and the West, made a huge error by neglecting what happened between the elections. The West could have poured energy and resources into building civil society — the vital functions of the press, of associations, of church and school. Yeltsin could have built a political party to back reform that would last beyond him. But he did not. Instead, Yeltsin saw himself as a personal guarantor of democracy, more father figure than pitchman. Facing a hostile opposition in parliament, he often ran roughshod over its members, governing with decrees rather than legislation, which didn’t help matters.
Ironic and sad though it may be, Yeltsin, champion of freedom, took as his successor a president who reversed course and steered the country toward authoritarianism. Why Yeltsin picked Putin is still a puzzle. A former KGB agent abroad and backroom operator to the mayor of St. Petersburg, Putin came to office with little experience in either Gorbachev’s perestroika or Yeltsin’s roaring ’90s. Putin had never stood for a competitive election or been subject to media scrutiny and criticism.
Many in the West nonetheless initially misread Putin as a modernizer who would continue Yeltsin’s path and stand up for the rule of law. Putin had published a manifesto suggesting that he would seek to create rapid economic growth and was committed to a market democracy as well as Russia’s tradition of a strong state. U.S. President George W. Bush famously said after their first meeting, "I looked the man in the eye. I found him to be very straightforward and trustworthy. We had a very good dialogue. I was able to get a sense of his soul." There were similarly approving, if premature, assessments by Western businessmen, journalists, and academics. Newsweek reported that in an early speech, Putin "insisted there would be no backsliding on any of the key political liberties won in Russia’s decade of democracy. Freedom of speech, freedom of conscience, freedom of the press, the right to private property — these basic principles of a civilized society will be protected, he said."
Today, we should be asking: Why was it so easy for Putin to stymie democracy? Why was there not more pushback? Why not hundreds of thousands of people in the streets, as in the Gorbachev years?
One answer is that the pro-democracy forces were weak and scattered. Putin came to power after a series of apartment-house bombings in Moscow and other cities, followed by a new offensive against the Chechen rebels who were blamed for the bombs. People seemed to yearn for a symbol of a strong state to face down terrorism and uncertainty, and Putin talked tough and lavished resources on the security services.
Another answer is that Russians enjoyed years of strong growth amid high oil prices. They felt a rising standard of living. With no political choices to make, they turned inward. Maria Lipman, editor of Pro et Contra, a journal published by the Carnegie Moscow Center, has said that people entered a kind of "no-participation pact" with Putin: They wouldn’t meddle in politics if he would stay out of their personal lives. Putin kept his end of the bargain. Now they have personal freedom, and little or none of the political kind.
Did we give Russia the wrong medicine? One influential group of critics has claimed that it was a miscalculation to impose capitalism and democracy so quickly on a country with so little experience of either. These critics said that while Americans were comfortable with democracy and believed that everyone should naturally welcome it, Russians had 1,000 years of history with autocracy and didn’t talk about political power in the same way. The long Russian tradition of a paternalistic state and the overweening reach of the Soviet Communist Party were given as reasons why, perhaps, it would be better to tiptoe slowly into change or choose a different model entirely. A leading voice in this group was Stephen F. Cohen of New York University, who wrote in Failed Crusade, his biting 2000 book, that "America’s Russia-watchers, with only a few exceptions, committed malpractice throughout the 1990s." He called it "the worst American foreign policy disaster since Vietnam." Others had similar laments.
I think these critics are mistaken. From what I witnessed over six years reporting from Moscow, radical reform was the correct choice for Russia, a way to demolish the monopoly on prices, property, and trade at the heart of the Soviet system and introduce competition as the oxygen of a new order. Going slow would have meant going nowhere.
What was needed was to cross a raging river, and the longer one lingered, the more likely one would be swept away by the forces who wanted to stop reform altogether. The communists were momentarily demoralized after 1991, but they regrouped and resisted change. Russia’s problems today are not the result of too much radical reform, but rather too little.
It’s also worth remembering what didn’t go wrong. After the Soviet implosion, it could have been so much worse. Russia did not fall into ethnic civil war like Yugoslavia did. It did not attempt to restore the Soviet Union or become a grim menace to global security. It is now largely forgotten, but in the early 1990s, uncertainty about Russia was such that the Clinton administration created a "reserve" of thousands of nuclear weapons in storage that could be redeployed if Russia became threatening in some way. In the end, Russia did not.
Russia got the most important things very right. Its people enjoyed more freedom than at any time in the country’s history. Millions went abroad for the first time, voted in elections, experienced a free press, and learned to rely on themselves rather than the state. They grasped the meaning of private property and entrepreneurship.
The big problems that remain are absence of the rule of law, the weakness of democracy and civil society, and the yawning need for modernization — the troubling, unfinished business of the era.
Unfortunately, Russia went only part of the way toward Yeltsin’s dream. It is not too late. The original goals were good ones, but it takes more than just picking the final destination. In a time of revolutionary upheaval, there is a fight every inch of the way.