Russia
Introduction
RUSSIA IS THE LARGEST of the fifteen geopolitical entities that
emerged in 1991 from the Soviet Union. Covering more than 17 million
square kilometers in Europe and Asia, Russia succeeded the Soviet
Union as the largest country in the world. As was the case in
the Soviet and tsarist eras, the center of Russia's population
and economic activity is the European sector, which occupies about
one-quarter of the country's territory. Vast tracts of land in
Asian Russia are virtually unoccupied. Although numerous Soviet
programs had attempted to populate and exploit resources in Siberia
and the Arctic regions of the Russian Republic, the population
of Russia's remote areas decreased in the 1990s. Thirty-nine percent
of Russia's territory but only 6 percent of its population in
1996 was located east of Lake Baikal, the geographical landmark
in south-central Siberia. The territorial extent of the country
constitutes a major economic and political problem for Russian
governments lacking the far-reaching authoritarian clout of their
Soviet predecessors.
In the Soviet political system, which was self-described as
a democratic federation of republics, the center of authority
for almost all actions of consequence was Moscow, the capital
of the Russian Republic. After the breakup of the Soviet Union
in 1991, that long-standing concentration of power meant that
many of the other fourteen republics faced independence without
any experience at self-governance. For Russia, the end of the
Soviet Union meant facing the world without the considerable buffer
zone of Soviet republics that had protected and nurtured it in
various ways since the 1920s; the change required complete reorganization
of what had become a thoroughly corrupt and ineffectual socialist
system.
Under those circumstances, Russia has undergone an agonizing
process of self-analysis and refocusing of national goals. That
process, which seemingly had only begun in the mid-1990s, has
been observed and commented upon with more analytic energy than
any similar transformation in the history of the world. As information
pours out past the ruins of the Iron Curtain, a new, more reliable
portrait of Russia emerges, but substantial mystery remains.
In a history-making year, the regime of President Mikhail S.
Gorbachev of the Soviet Union was mortally injured by an unsuccessful
coup in August 1991. After all the constituent republics, including
Russia, had voted for independence in the months that followed
the coup, Gorbachev announced in December 1991 that the nation
would cease to exist. In place of the monolithic union, there
remained the Commonwealth of Independent States (CIS--see Glossary),
a loose confederation of eleven of the former Soviet republics,
which now were independent states with an indefinite mandate of
mutual cooperation. By late 1991, the Communist Party of the Soviet
Union (CPSU--see Glossary) and the Communist Party of the Russian
Republic had been banned in Russia, and Boris N. Yeltsin, who
had been elected president of the Russian Republic in June 1991,
had become the leader of the new Russian Federation.
In the late 1980s, Yeltsin's appeals for political reform gained
him the enmity of the communist hierarchy, including Gorbachev,
but he won the support of a Russian public whose self-expression
had been liberated by Gorbachev's own policy of glasnost (literally,
public voicing--see Glossary). In that period, the atmosphere
of Russia, especially its main cities, Moscow and Leningrad, was
one of expectation that significant political changes finally
would occur after the sclerotic decades of the Brezhnev regime
(1964-82). The first years of Yeltsin's presidency, which began
with an overt challenge to the Soviet Union's authority over Russian
affairs, brought a surge of activity that promised economic and
political reform and an end to the economic stagnation and social
malaise of the 1980s. Both Russians and Westerners hoped that
Russia could make a short, painless transformation to democratic
rule and free-market economics. Although events of the first five
post-Soviet years provided some reasons for optimism, all observers
soon realized that whatever transformation Russia was to experience
would require much more time, and would yield much less predictable
results, than initially expected.
At the time it became independent, the Russian Federation included
nineteen autonomous republics, ten autonomous regions, and one
autonomous oblast, each designated for a particular ethnic group.
The ethnically Russian population was (and remains) the largest
group in all but a handful of the republics and autonomous regions;
most of the exceptions, where the local ethnic groups constitute
a majority, are located in the North Caucasus.
In 1989 the Baltic republics' declarations of sovereignty within
the Soviet Union began a cascade of similar declarations by jurisdictions
within Russia. In the second half of 1990 alone, ten of Russia's
autonomous republics declared sovereignty. When Russia became
an independent state, perceptions of Moscow's weakness further
encouraged separatist movements, which in turn prompted a long-term
campaign by the Yeltsin government to maintain the federation
intact. Although some experts predicted that the Russian Federation
ultimately would suffer the same fragmentation as the Soviet Union,
little evidence of such an outcome has been seen in the first
five years of the post-Soviet era.
In 1992 Moscow began the struggle to preserve the federation
by inducing all but two autonomous republics (Chechnya and Tatarstan)
to sign the Federation Treaty defining the respective areas of
jurisdiction of the national and regional governments. The treaty
included definitions of sovereignty over natural resources and
other economic assets. Since the treaty was signed, Moscow's hegemony
has been threatened in several other instances, the most notable
being the Republic of Chechnya's fulfillment of its 1991 declaration
of independence by a coup against the republic's Russian-controlled
government in 1993. Chechnya's defiance and the hapless military
response that Russia initiated against the republic in 1994 encouraged
other regions to seek more power. In most cases, including oil-rich
Tatarstan and diamond-rich Sakha (Yakutia), the Yeltsin government
has signed compromise bilateral treaties assuaging local demands,
which are mostly economic. Some of Russia's fifty-five lesser
jurisdictions--the six territories and the forty-nine oblasts--have
made similar demands. Because the federal government has not been
able to enforce its policies on a number of issues, the jurisdictions
have taken varying approaches to economic and political reform,
creating a patchwork effect that has inhibited interregional cooperation.
The military failure in Chechnya was the most obvious indication
of a grave overall decline in post-Soviet Russia's military establishment.
The Soviet military earned society's gratitude by its performance
in the Great Patriotic War (as World War II is commonly called
in Russia), a costly but unified and heroic defense of the homeland
against invading Nazi armies. In the postwar era, the Soviet military
maintained its positive image and budgetary support in good part
because of incessant government propaganda about the need to defend
the country against the capitalist West.
The demise of the Soviet Union also ended much of the threat
of military confrontation between Russia and the West that had
characterized the Cold War. Already in the mid-1980s, however,
Soviet military doctrine had begun shifting to a more defensive
posture in recognition of the country's economic limitations,
even as Soviet occupation of the Warsaw Pact (see Glossary) nations
and of Afghanistan continued. Beginning in 1988, the Soviet military
establishment suffered a series of major blows. The military operation
in Afghanistan, which had little success against fervid guerrilla
forces, was declared a failure in 1988, and Soviet forces withdrew
after nearly ten years of combat. In 1989 the Warsaw Pact alliance
began to disintegrate as all the East European member nations
rejected their communist governments; the alliance dissolved in
1991, and by 1994 all Russian forces had left Eastern Europe.
The third blow, the end of the Soviet Union itself, required
withdrawal of troops stationed in the other fourteen republics;
in this process, much equipment and weaponry was left behind and
claimed by the newly independent states. The successive return
of large numbers of troops into Russia after each of these three
events caused an enormous logistical problem for the military;
furthermore, the morale of the institution was seriously eroded
by withdrawals of unprecedented magnitude from regions assumed
to be permanent parts of the Soviet domain. At the same time,
serious examples of corruption were exposed at the highest command
levels of the armed forces.
In 1992 the Russian Federation inherited the bulk of the Soviet
Union's armed forces as well as all of their problems. In the
early 1990s, there were new ramifications of the morale and command
problems that had surfaced earlier. In a new social environment
of permissiveness and diversification, increasing numbers of Russia's
youth rejected military service as a patriotic duty, many top
individuals in the junior officer corps resigned because of poor
pay and housing, and the incidence of crime increased significantly.
At the same time, corruption and politicization destroyed the
unity that had characterized the senior officer corps during the
Soviet era. These changes all occurred as the need for a new set
of national security guidelines became increasingly evident. Within
a few years, both the geopolitical and the budgetary conditions
of Russia's military had changed dramatically without appropriate
adjustments in military doctrine. Although the size of the military
was reduced between 1992 and 1996 from about 2.8 million personnel
to about 1.5 million, reductions were disproportionately high
in the enlisted ranks, leaving a bloated officer corps. In 1996
both the military doctrine (which was updated fragmentarily in
1993) and military equipment still reflected the Soviet-era priority
of large-scale mechanized land war and/or nuclear war to be fought
on the continent of Europe.
In 1996 elements of a new military doctrine appeared, but fundamental
conflict remained between reformers and hard-liners in the policy-making
establishment. The strong positions taken by the opposing sides
suggested that enacting a comprehensive new doctrine would involve
a long struggle. Despite the diminished capability of Russia's
economy to support the military, hard-liners insisted that major
reductions would damage national security. As budgetary support
of routine military readiness has shrunk drastically in the mid-1990s,
calls for large-scale reform have intensified. Among the main
reform elements cited are downsizing the armed forces, shifting
their emphasis to mobile warfare, eliminating much of the corrupt
and flabby corps of senior officers, relying more heavily on contract
volunteers rather than conscripts, and discarding the concept
of military parity with the United States. In July 1996, the State
Duma (the lower house of the Russian parliament) began hearings
on reform measures. In December the Duma recommended the formation
of a federal department to set military reform guidelines through
2005, together with a 25 percent increase in the military budget.
The condition of the military forces remains an important part
of Russia's national self-image. The Chechnya conflict, the first
post-Soviet test of those forces, revealed shocking insufficiencies
even in elite units. In mid-1996 the dismissal of Minister of
Defense Pavel Grachev, upon whom the most blame for Chechnya had
been heaped, produced no visible improvement. In August 1996,
the sudden loss of the Chechen capital of Groznyy, from which
Russian forces had driven the Chechen guerrillas in 1995, forced
the withdrawal of Russian forces under the terms of the cease-fire
that followed.
In the second half of 1996, ultimate responsibility for military
policy remained balanced uncertainly between civilian and military
authorities, as it was when Grachev was minister of defense. In
November 1996, a call for a new military doctrine by Yeltsin's
civilian Defense Council met stiff resistance from the Ministry
of Defense.
Grachev's successor, Igor' Rodionov, inherited a force with
plummeting morale, gravely deteriorating matériel support, minimal
training, and no clear doctrine. In the second draft call of 1996,
an estimated 37,000 men out of a target number of 215,000 conscripts
failed to report. This was the largest recorded episode of draft
dodging since the establishment of the Soviet Union. The budget
passed in January 1997 added only token amounts to the 1996 allotment
of US$19 billion. The budget provided for only about 38 percent
of the Ministry of Defense's budget request and made no allowance
for inflation. The 1997 budget package caused Rodionov to curse
the Ministry of Finance as Grachev had, intensifying tensions
among the "power ministries" of the Government (cabinet). Meanwhile,
in the last months of 1996 the pay arrears of the Ministry of
Defense mounted steadily, and there were rumors that military
strike committees had been formed. Already in August, an estimated
US$2.8 billion was owed to Russia's military personnel. Rodionov
also repeated Grachev's complaint that military units of the internal
security agencies received funding that should go to the Ministry
of Defense. The exact troop levels of those units are unknown,
but in the second half of 1996 some estimates exceeded 1 million.
Rodionov predicted that the grandiose plans of Yeltsin and others
for military restructuring and modernization would be frustrated
without significant expenditures in the transition period. The
plans included large-scale force reduction, a new military doctrine
matching Russia's less stressful post-Cold-War geopolitical position,
and possibly an all-volunteer force. In January 1997, the Ministry
of Defense submitted a reform plan whose first step was increased
funding. The Defense Council submitted a rival, long-term plan
extending beyond 2005 and calling for 30 percent reductions in
defense and non-defense troop levels as the first reform step,
citing the country's low financial resources. The conflicting
emphasis of the two plans exacerbated the existing disagreements
in the defense establishment, specifically between Rodionov and
Defense Council chief Yuriy Baturin, over the direction of reform.
Meanwhile, accusations of corruption and incompetence in the
military establishment continued, with Duma Defense Committee
chairman Lev Rokhlin, a retired general, levying the most serious
charges. Those charges combined with the military's abject failure
in Chechnya to further erode the authority of the Ministry of
Defense under Rodionov. In December 1996, Yeltsin forced Rodionov
to resign his commission in order to move the ministry toward
civilian rather than military control.
As Russia's military deteriorated, the arms export activities
of its defense industries continued to grow. In 1995 Russia exported
more arms to developing countries than any other producer; China
was its best customer. Total 1995 sales were estimated at US$6
billion, an increase of 62 percent over 1994. At the end of 1996,
defense authorities announced that foreign arms sales would play
a prominent role in financing military reform in coming years.
In early 1997, Russia angered the West by selling S-300 missile
systems to the Republic of Cyprus and by selling a third Kilo-class
diesel submarine to Iran.
Some of the most visible domestic products of the arms industry
suffered production delays in 1996. In November construction began
on the Yuriy Dolgorukiy, the first in the new Severodvinsk class
of strategic missile submarines described as superior to any existing
model and expected to carry Russia's sea-based nuclear missiles
after 2000. Plans had called for three such boats to go into production
in 1996. The Petr Velikiy, a powerful, heavily armed cruiser whose
keel was laid in 1986, finally took its maiden voyage in October
1996 after years of production delays. In March 1997, the Moscow
Aviation Production Association (MAPO) postponed serial production
of an advanced multifunctional fighter, targeting instead the
MiG-35 fighter destined for overseas sales.
The agencies of internal security have fared better than the
military in the post-Soviet era. Throughout the Soviet period,
these agencies were among the most firmly entrenched and respected
national institutions. A succession of internal security agencies,
ending with the Committee for State Security (Komitet gosudarstvennoy
bezopasnosti--KGB; see Glossary), struck fear in the Soviet population
by thoroughly penetrating all of society and launching periodic
purges (the most violent of which occurred in the 1930s) against
elements of society deemed harmful to the socialist state.
In the post-Soviet era, internal security agencies generally
have received more solid support from the Yeltsin government than
the armed forces, although specific agencies have been favored.
The Federal Security Service (FSB), the most direct successor
to the KGB, has a broad mandate for intelligence gathering inside
Russia and abroad when national security is threatened, and no
concrete governmental oversight is prescribed in legislation.
Human rights advocates in Russia and elsewhere, sensitive to the
precedent of unbridled KGB power, have criticized the direct presidential
control of internal security agencies such as the FSB, and human
rights violations have been documented. Armed units of the FSB
and the Ministry of Internal Affairs (MVD) were heavily involved
in the Chechnya campaign.
Russia's still-powerful internal security agencies also were
hit by scandal in 1996 when the former financial head of the Federal
Agency for Government Communications and Information (FAPSI) was
imprisoned by its sister agency, the FSB, for embezzling large
sums from the FAPSI budget. Although the affair received no official
acknowledgment, the independent press reported a major power struggle
between powerful successor agencies of the KGB. Such a scenario
would continue a series of rearrangements of the former KGB agencies
that have occurred in the 1990s because of political power struggles
rather than security considerations.
Rampant, well-publicized corruption in the security agencies
has eroded public confidence in all of Russian law enforcement.
In July 1996, the Ministry of Internal Affairs (MVD) reported
that 1,400 employees of the regular police (militia) had been
arrested in 1995 for various types of criminal activity, including
participation in crimes by criminal organizations of the mafiya.
That report was the result of the MVD's Clean Hands Campaign,
a highly publicized public-confidence program begun in 1995 to
purge law enforcement agencies of dishonest members. But, according
to most accounts, the 1995 arrests removed only a very small part
of Russia's internal security corruption.
Russia has experimented cautiously with Western-style jurisprudence
and penal reform. In the mid-1990s, jury trials were introduced
in some regions, and the rights of accused persons and prison
inmates were stipulated more concretely. Nevertheless, major elements
of the Soviet system remain in the jurisprudence of the Russian
Federation. For example, procurators (public prosecutors) still
have both investigative and prosecutorial functions, and expansion
of the jury system has met substantial resistance among entrenched
Soviet-era judges and procurators. In addition, prison conditions
have deteriorated substantially because Russia's crime wave has
increased the prison population but funding is not available for
new facilities. In early 1997, more than one-quarter of the prison
population was awaiting trial, and pretrial detention lasted as
long as three years for some individuals. Russia's procurator
general, Yuriy Skuratov, reported that his office had been overwhelmed
in 1996 with 1.2 million court cases, for which it had only about
7,000 investigators. He noted that the same trend was continuing
in 1997.
After many delays and amendments, a new Criminal Code went into
effect on January 1, 1997. An estimated 150,000 criminal cases
were expected to require review based on the new code, and many
prisoners will be released because the laws under which they were
convicted no longer exist. A separate criminal correction code
defining conditions in the prison system was scheduled to go into
effect in July 1997.
Compounding Russia's other problems are deteriorating environmental
conditions, the extent of which became clear only gradually during
the 1990s. Among the most serious hazards in Russia are pollution
of ground water and bodies of water in most of European Russia;
air pollution from the venting of unprocessed industrial by-products;
large concentrations of waste chemicals from industry and agriculture;
and actual and potential radiological pollution from civilian
and military nuclear installations.
In August 1996, the Bellona Foundation of Oslo, long a vocal
critic of Russia's nuclear waste procedures, issued a damning
report on the threat posed to Arctic regions by Russia's nuclear
waste disposal practices and at least thirty-six decommissioned
nuclear submarines at anchor near Murmansk with their reactors
on board. Bellona described the Murmansk region as having the
world's largest concentration of active and defunct nuclear reactors,
many of which are not maintained or disposed of properly. According
to the report, the FSB obstructed the foundation's investigation
and imprisoned Aleksandr Nikitin, the retired Russian naval officer
who was a key author of the report. As Nikitin's trial was delayed
repeatedly, his case attracted international protests.
Meanwhile, the interdepartmental Commission for Ecological Safety,
headed by senior environmental authority Aleksey Yablokov, continued
releasing shocking statistics about Russia's environmental quality.
For example, in 1996 one in five tap-water samples failed to meet
public health chemical standards, and about 40 percent of sewage
was being dumped untreated into bodies of water, with Moscow and
St. Petersburg among the regions most affected. In the second
half of 1996, Yablokov lobbied Yeltsin unsuccessfully to expand
the ecological safety commission and its funding.
Russian environmentalists won a battle in December 1996 when
a regional referendum soundly rejected completion of the Kostroma
Nuclear Power Station, on which construction had been suspended
after the Chernobyl' disaster of 1986. This was Russia's first
referendum on such an issue; the 59 percent turnout made the vote
legally binding. In February 1997, the Republic of Sakha announced
plans to conserve one-quarter of its vast Siberian territory,
including the world's largest tract of virgin forest, protecting
several endangered species and the shrinking indigenous population
of Evenk nomads. That plan bypassed national authorities--an increasingly
frequent trend in environmental and other matters. The Sakha government
received a support grant directly from a Swiss environmental organization.
The "social umbrella" of the Soviet Union's socialist system,
which nominally had guaranteed all citizens employment, health
care, child care, pensions, and universal, high-quality education,
also encountered problems. By the 1980s, many of the more than
200 million citizens covered by the umbrella began receiving fewer
benefits or benefits of lesser quality. The Soviet education and
health systems, which offered top-quality service only to the
country's political, scientific, and cultural elite, were undermined
by the infrastructural and organizational failures inherent in
such centrally planned systems. The Soviet concept of guaranteed
employment eroded the national economy by encouraging slipshod
labor and malingering.
In the 1990s, the state's social welfare system retained the
bureaucratic complexities of the Soviet era, but it did not keep
pace with the needs of society. As runaway inflation devalued
the fixed payments of the pension system, many citizens depending
on fixed incomes fell below the official poverty line, which in
late 1996 was about US$67 per month. In 1996 an estimated 30 percent
of those with fixed incomes and about 24 percent of the total
population were in that category. The government's failure to
index welfare programs also reduced the value of a wide variety
of other entitlements that had provided Soviet workers with substantial
savings in the cost of living. Nevertheless, Soviet-era programs
such as maternity leave, child care, free medical facilities,
and housing subsidies remained substantially unchanged in the
mid-1990s, continuing expectations that increasingly strained
the federal budget.
Reforms such as pension indexation and differentiation of individual
contributions to pension funds were only beginning to appear in
the mid-1990s. By that time, the government's inability to collect
taxes and other obligated funds had had a major impact on social
programs. In the fall of 1996, an estimated US$3 billion in pension
payments were overdue. At that point, the Pension Fund, which
is administered by the Ministry of Social Protection, was owed
US$8.5 billion by the enterprises that are the main contributors.
The federal budget also owed money to the fund, which by mid-1996
had exhausted its commercial bank credits by taking loans to make
pension payments.
Russia's health care system also deteriorated substantially
in the 1990s. Equipment and medicines are in increasingly short
supply, aging facilities have not been replaced, and existing
facilities often are inaccessible. Medical personnel generally
are not trained as rigorously as their contemporaries in the West,
and chronic failures to pay doctors and nurses have exacerbated
shortages in those professions. The 1997 national budget allocated
US$1.6 billion for health, an increase of US$158 million over
1996, but most of the new money was targeted for medical centers
in large cities. The 1997 figure was 2.6 percent of the gross
domestic product (GDP--see Glossary), compared with the World
Health Organization's recommended minimum share of 5 percent.
Failures in health care are one aspect of an increasingly grave
health crisis afflicting the Russian population as a whole in
the 1990s. Other elements of the crisis include widespread and
acute environmental pollution of various types, which government
programs and nongovernmental "green" organizations have not been
able to ameliorate; the continued heavy use of tobacco and alcohol
and a growing narcotics addiction problem; and poor hygiene and
nutrition practices among large portions of the population.
In the first ten months of 1996, confirmed cases of human immunodeficiency
virus (HIV) were four times more numerous than in all of 1995,
with drug addicts accounting for about 70 percent of cases. Although
the official estimate of HIV cases was fewer than 2,000 in 1996,
other estimates placed the number at ten times that many. The
Ministry of Health reported that only 50,000 of Russia's estimated
2 million drug addicts were under treatment for their addiction
in 1996. In 1996 health experts identified alcoholism as the number-one
cause of premature death in Russia, a situation exacerbated by
the estimated 68 percent of alcohol products that contain foreign
substances. By 1995 Russia's average life expectancy had fallen
to only fifty-seven years for males and seventy-one for females,
and natural population growth has been negative since 1992. In
the first nine months of 1996, the population showed a net decrease
of 350,000, dropping to 147.6 million according to the State Committee
for Statistics.
Russia's education system has suffered from the same shortages
and lack of support as its health system. And education, accorded
high value in Soviet society, seems to have lost some of its esteem
in a fragmented Russian society where many traditional institutions
are viewed with unprecedented skepticism. In the 1990s, the centralized,
rigid Soviet education system has given way to a system that gives
localities substantial autonomy in shaping curricula and hiring
teachers. This opportunity for creativity has been hampered, however,
by two conditions: because many Soviet-trained Russian educators
do not understand individual initiative and autonomy, many schools
have perpetuated the rote memorization methods of the past; and,
as in other aspects of Russian social policy, funding for personnel
and infrastructure has been woefully inadequate. Teachers, always
underpaid in the Soviet system, have been impoverished by the
Russian system, and many have left the profession since 1992.
In this atmosphere, private schools have begun to offer creative
curricula to students who can afford to eschew public schooling.
According to Deputy Prime Minister Viktor Ilyushin, by October
1996 education and culture had received only 65 percent and 30
percent, respectively, of the 1996 budget funds allotted to them.
In late 1996 and early 1997, the highest proportion of striking
workers were teachers.
Beginning in the late 1980s, religion assumed a more important
role in the lives of many Russians, and in the life of the Russian
state as well. Russian Orthodoxy, the dominant religion of Russia
since the ruler Vladimir accepted Christianity in A.D. 988, was
subservient to the state from the time of Peter the Great (r.
1682-1725) until 1917; nevertheless, it exerted a powerful influence
on the spiritual lives of most Russians. In the Soviet period,
the activities of the church were further restricted as most churches
and monasteries were closed and religious observances strongly
discouraged.
In the late 1980s, the Gorbachev regime began to restore the
church's property and rights; official observance of the millennium
of Russian Orthodoxy in 1988 was a watershed event in that process.
Beginning in 1992, the Russian Orthodox patriarchate, which had
been restored in 1917 only to be repressed for the next seventy
years, assumed growing influence in state as well as spiritual
affairs. Many churches were built and restored, and in the early
1990s millions of Russians returned to regular worship. However,
by early 1997 Orthodox Russians attended church at about the same
rate as religious believers in West European countries. In the
1990s, politicians have eagerly sought the opinion of the church
on most important issues, and in 1996 even the communist presidential
candidate, Gennadiy Zyuganov, made an appearance with Patriarch
Aleksiy II an important element of his campaign.
Other religious groups also have enjoyed relative freedom in
the post-Soviet period, with some limitations. Mainstream Protestant,
Roman Catholic, and Muslim groups are fully accepted by the state
and the Orthodox Church, but the Orthodox hierarchy often has
used its dominant position to discourage or block the activities
of their congregations. The new freedom of the Gorbachev era brought
a wave of Western evangelical groups whose proselytizing the Orthodox
hierarchy viewed with alarm and hostility. In mid-1996 the State
Duma passed legislation establishing a state committee to monitor
the activity of such groups. The law was introduced by nationalist
allies of the Orthodox Church and opposed by democratic factions
as unconstitutional. The Jewish community, whose religious and
cultural activities have blossomed in Russia in the 1990s, still
experiences subtle forms of discrimination.
The problems of post-Soviet Russia also are based directly in
economic circumstances. Some of the reasons for Russia's uneven
progress are found in the legacy of the Soviet era, others in
post-Soviet economic policies. For the majority of Russian citizens,
the ballyhooed economic reforms of the 1990s did not improve the
quality of life; indeed, in 1996 the "shock" of Russia's transition
to a free-enterprise system seemed to be intensifying rather than
subsiding, as unemployment figures rose and more Russians slipped
below the official poverty line. In the first half of 1996, the
number of registered unemployed workers increased by 16 percent,
totaling 2.7 million--but a much higher number of Russians remained
unemployed and failed to register for meager state benefits. According
to an official report, average real incomes decreased by about
40 percent between 1991 and October 1996.
Russia's society has become increasingly divided according to
economic categories. As the majority of Russian citizens struggle
to remain above the poverty line, a small minority have prospered
through high-risk economic ventures that often involve connections
with the mafiya, Russia's pervasive network of organized criminal
organizations. Members of the successful minority increasingly
are distinguished from the majority of society by conspicuous
consumption, which has engendered strong feelings of resentment.
Another type of post-Soviet success story is demonstrated by former
members of the Soviet official elite, the nomenklatura, who have
used Soviet-era connections to gain access to financial resources
and influential enterprise positions in the new system. By 1997
experts had identified a new oligarchy--the post-Soviet entrepreneurs
who have built personal empires and strong ties with the government
at the expense of their fellow Russians. Russian society also
is increasingly divided by generations. Older Russians have found
adapting to the complexities and challenges of post-Soviet society
much more difficult than have their younger compatriots, so the
former often preserve as much as possible of their former lives,
garnished with nostalgia for an idealized Soviet past.
Moscow has become the center of Russia's economic activity,
both personal and corporate, far outstripping St. Petersburg,
which in the Soviet era was the more cosmopolitan city. Many foreign
investors have concentrated their activity in Moscow, where all
of Russia's large banks are headquartered and where the energetic
Mayor Yuriy Luzhkov has fostered rapid commercial expansion with
active government participation. Meanwhile, the luxurious life
of the new Moscow upper class has spread very little to the hinterlands.
The increasing availability of land and materials has enabled
some individuals to escape dependency on the old housing subsidy
system (which nevertheless remained active in 1997). In the transition
to a fully privatized housing system that began in 1992, the scarcity
of resources and high inflation drove private housing prices beyond
the reach of most Russians; in the mid-1990s, the slow, uneven
progress of housing reform meant the continued existence of long
waiting lists and very crowded housing conditions, especially
in the cities.
The Soviet and Russian economies have been supported by one
of the richest supplies of natural resources in the world. Fuels,
minerals, timber, and a well-educated labor force always have
been strong principal assets of industry. But the location of
Russia's raw materials often has presented a transportation problem.
As the industrial centers of European Russia used up nearby fuels
and other resources, the more distant supplies of Siberia have
become critical but expensive alternatives. The sheer volume of
available raw materials encouraged tremendous waste in the Soviet
system; central planning took into account neither the possibility
of running out of materials nor the grave environmental damage
caused by uncontrolled exploitation.
Economic policy in the Soviet Union was the exclusive domain
of planners in the central government, whose quotas and distribution
decisions ruled virtually all economic activity in Russia and
the other Soviet republics. Resource apportionment in that system
favored heavy industry and the military-industrial complex at
the expense of consumer production, token revival of which was
attempted sporadically beginning with the regime of Nikita S.
Khrushchev (in office 1953-64). The services sector remained underdeveloped,
and agricultural production policy precluded private landownership
and relied almost entirely on collective farms (see Glossary)
and state farms (see Glossary). Central allocation of resources
and price establishment created an inflexible economic system
whose production and consumption sides had no relation to each
other. The basic unit of planning, the five-year plan (see Glossary),
set long-term goals whose basis in real economic conditions often
was nonexistent by the end of the period. The Soviet planning
system also produced a substantial class of state bureaucrats,
many of whom preserved their influential and highly profitable
positions in state enterprises (and hence their stubborn opposition
to economic reform) well into the post-Soviet era.
The Soviet state also had full control of foreign trade. The
vast majority of Russia's overseas commercial activity was conducted
with the nations of the Community for Mutual Economic Assistance
(Comecon--see Glossary), all of which followed the Soviet model
of the centrally planned economy, and all of which were governed
by Comecon's artificial system for allocation of production responsibilities.
This closed commercial system included a high percentage of barter
arrangements. The system was supplemented by equally regimented
commercial links among the republics of the Soviet Union. An important
result was that Russian products were exposed to very little genuine
competition in world markets, despite periodic efforts to cultivate
commercial relationships outside Comecon.
By 1980 the Soviet economy had entered a decline from which
it never was to emerge. It became obvious that the strong central
controls that traditionally guided economic development had failed
to promote the creativity and productivity urgently needed in
a highly developed, modern economy. As one of the two world superpowers,
the Soviet Union was acutely conscious that the West, and especially
the United States, was bypassing it in many areas outside the
military field. So, beginning in the mid-1980s, Soviet leader
Mikhail S. Gorbachev (in office 1985-91) experimented with unprecedented
economic reforms, including limited application of free-market
principles, in a policy called perestroika (rebuilding--see Glossary).
However, the Gorbachev concessions were too small and too late,
so the system's inherent flaws remained. The standard of living
and productivity both continued to fall until the Soviet Union
dissolved and central planning was discredited in 1991.
As president of the Russian Republic, Boris Yeltsin already
had advocated substantial economic reform prior to Russia's independence,
in order to begin resurrecting Russia's economy from the crisis
of the last Soviet years. For the new Russian Federation, the
Yeltsin administration set ambitious economic reform goals in
1992: strict limitation of government spending to cut inflation;
redirection of state investment from the military-industrial complex
and heavy industry toward consumer production; a new tax system
to redistribute financial resources to more efficient sectors;
cutting of government subsidies for enterprises and eliminating
government price controls; and lifting of government control of
foreign trade. Privatization of the major sectors of production,
still virtually state monopolies in 1991, was another primary
goal.
In 1992 worsening economic conditions brought a confrontation
with the Supreme Soviet (legislature) over economic policy. The
clash forced Yeltsin's dismissal of reform Prime Minister Yegor
Gaydar and a general modification of reform goals under Gaydar's
pragmatic successor, Viktor Chernomyrdin. At that point, failing
enterprises still received easy credit from the banking system
and from other enterprises--a continuation of Soviet-style fiscal
management and a crucial flaw that began to be corrected only
in 1995.
Many of the goals of the Yeltsin program were met at least partially
in the first five post-Soviet years, depending on which statistics
are used to define economic trends. Foreign trade has been liberalized
significantly, and the list of Russia's trading partners now is
dominated by West European rather than East European and former
Soviet countries. The course of foreign investment has been uneven.
Although Western and Japanese firms have shown great interest
in joint ventures with Russian enterprises, Russia's unfinished
and uncertain commercial and legal infrastructure has limited
foreign participation, and protectionist laws restrict foreign
activity in industries such as communications and automobiles.
International lenders such as the International Monetary Fund
(IMF--see Glossary), the Paris Club of Western government lenders,
and the London Club of international commercial banks have provided
substantial aid, with the caveat that Russia must improve economic
indicators such as its inflation rate and budget deficits. In
1993 and 1994, soaring inflation and government deregulation of
prices robbed consumers of much of their purchasing power before
a government tight-money policy brought inflation under control
in 1995 and 1996. In December 1996, prices rose by 1.4 percent,
although wage arrears made that figure irrelevant for many Russians.
The Yeltsin privatization program began with small enterprises,
a large proportion of which were in private hands by 1995. Sales
of larger enterprises, accomplished in several phases, encountered
substantial difficulties, however. In 1995 allegations of corruption
slowed the process, as did persistent opposition from the antireform
State Duma factions. Privatization was virtually halted during
the 1996 presidential election campaign, but in July 1996 the
administration announced new goals and a reformed system for ownership
transition. Initially positive, Western evaluations of Russia's
privatization program were tempered in 1996 by continued government
favoritism toward former state enterprises, by the sale of investment
shares to banks and other institutions with close state connections
rather than to the public, and by the program's distinct slowdown
in 1996. In October 1996, the government had collected only 14
percent of the year's targeted privatization revenue of US$2.2
billion. In November the planned public sale of stock in two major
state-owned telecommunications firms, Rostelekom and Svyazinvest,
was canceled in favor of stock sales to two large banks that had
financed Yeltsin's 1996 campaign, heralding a new privatization
scandal. The 1997 national budget set a privatization income goal
for 1997 at US$1.1 billion, but already in February Vladimir Potanin,
head of the privatization revenue collection commission, expressed
doubt that the goal could be met.
Tax collection remained a major problem for Russia as of early
1997. Although some nominal tax reforms were put in place, tax
collection remained inept, and the system still failed to promote
private initiative or foreign investment. Despite constant government
pleas, promises, and reform blueprints, and despite substantial
pressure from the IMF, in 1997 taxation remained the main obstacle
to budgetary solvency.
The government lost large amounts of tax revenue because unofficial
and illegal commerce is widespread and because the State Taxation
Service inspires so little respect from legitimate businesses.
According to an official 1996 estimate, only 16 percent of Russia's
2.6 million firms were paying taxes regularly, and at least twice
that number paid no taxes at all. On three different occasions,
the IMF postponed installments of a US$10.1 billion loan to Russia
because of the taxation problem--twice in the second half of 1996
and again in February 1997.
When the official tax shortfall reached US$24.4 billion in October
1996, the government began televising appeals for tax-law compliance.
A new emergency tax commission, headed by Prime Minister Chernomyrdin
and Chief of Staff Anatoliy Chubays, targeted seventeen of Russia's
largest companies for bankruptcy proceedings if their huge tax
arrears were not paid immediately. Among the most delinquent enterprises
were three subsidiaries of Chernomyrdin's extremely wealthy former
company, the State National Gas Company (Gazprom), which reportedly
owed US$2.1 billion. Many large enterprises failed to comply,
and much of Russia's extensive so-called shadow economy remained
beyond the reach of the commission. Critics characterized the
emergency commission as a stopgap tactic that delayed fundamental
reform in the tax system. According to government statistics,
in 1996 some 20,000 collection orders were issued for back taxes
amounting to US$15.7 billion; the orders yielded only US$3.8 billion
to the state budget. Early in 1997, Minister of Finance Aleksandr
Livshits drafted a new tax code that would have saved the government
an estimated US$30 billion annually. But the plan's anticipated
closing of profitable loopholes attracted sharp resistance. In
February 1997, Minister of Internal Affairs Anatoliy Kulikov,
known as a hard-liner, was given the task of cracking down on
tax violators. Yeltsin removed Livshits from his position during
the Government reorganization of March 1997.
In March the Government threatened bankruptcy proceedings against
a new group of ninety nonpaying enterprises, many of them quite
large, hoping to encourage public sales of shares that would dislodge
Soviet-era managers in favor of outside investors. At the same
time, privatization chief Al'fred Kokh was given control of the
inept State Taxation Service.
Besides the chronic tax collection failure, institutional remains
of the Soviet era also continue to plague economic progress. In
many large plants, the economic reforms of the early 1990s left
control with the same managers who had run the plants for the
state. In the post-Soviet years, managers have taken advantage
of Russia's new free-market atmosphere, and the lack of effective
commercial legislation, to line their own pockets--often in cooperation
with criminal organizations--while paying little attention to
plant productivity. In 1996 the Government increased subsidies
to some major automobile and defense plants, reversing the direction
of privatization and further diminishing incentives.
Another obstacle to economic stability is the pervasive influence
on economic activity of the mafiya--as commonly used in Russia,
a term including gangsters, dishonest businesspeople, and corrupt
officials. In the 1990s, Russia is suffering the effects of an
increasingly prosperous national network of criminals who extort
protection money from an estimated 75 percent of businesses and
banks. Individuals refusing such payments often are the victims
of violent crimes. In 1995 gangs controlled an estimated 50,000
private and state enterprises and had full ownership of thousands
more. Unlike organized criminal groups in the West, which specialize
in illegal activity such as drug trafficking and prostitution,
Russia's mafiya spans the entire range of the economy, discouraging
private enterprise and siphoning off 10 to 20 percent of enterprise
profits that are neither taxed nor reinvested in legitimate business.
Organized crime also has been involved in the movement of a huge
amount of capital--estimated at US$1 to US$2 billion per month--out
of Russia in the mid-1990s. Such activity has prospered mainly
because of strong links with corrupt officials; an estimated 30
to 50 percent of organized crime's proceeds is spent on bribes
to procurators, police, and bureaucrats.
This connection is not new in the post-Soviet era; already in
the Brezhnev era, officials took bribes from the underworld as
the black market responded to gaps in Soviet production. In the
early post-Soviet years, reformers implicitly condoned such activity
in the hope that it would hasten the development of a legitimate
private-enterprise sector. In 1993, however, government measures
against criminals were stimulated by publicity about Russia's
crime wave and by the success of ultranationalist political groups
who stressed the crime issue. Many of the Yeltsin administration's
law enforcement decrees of 1993 and 1994 were of questionable
constitutionality, and they have had little overall effect in
the mid-1990s because law enforcement agencies remain corrupt.
As Russia has attempted to meet the standards for inflation
and budget deficits set by international lenders, a key element
has been limiting the money supply, which was poorly controlled
until 1995. The more stringent policies established that year
brought loud complaints from regional governments, an increase
in noncurrency payments that hampered the collection of state
revenue, and continued wage arrears in state and private enterprises
suffering cash shortages. Although the annual inflation rate for
1996 was 22 percent, compared with 131 percent in 1995, authorities
in the Government and elsewhere blamed a new economic downturn
on the tight-money policy because private enterprises lacked capital
with which to expand their operations.
The 1997 monetary plan of the Russian Central Bank (RCB) called
for increasing the money supply by 22 to 30 percent during that
year, a level not projected to raise inflation above the 12 percent
annual increase forecast by the 1997 national budget. At the end
of 1996, the RCB planned for a ruble depreciation of 9 percent
during 1997, which would maintain the exchange rate at between
5,750 and 6,350 rubles per United States dollar at the end of
the year. During 1996 the exchange rate moved from 4,640 rubles
to the dollar to 5,560, an increase of nearly 20 percent.
A Government goal for 1997 was reducing the interest rate for
domestic bank loans to 20 or 25 percent to provide working capital
for stagnant enterprises and limit the haphazard, uncontrolled
interenterprise loans and in-kind payments that had proliferated
as capital became scarce. However, shares in most enterprises
remained unavailable to the general public, and the high-interest
bonds sold by the Government in 1996 had attracted large amounts
of bank capital away from more risky investment in private ventures.
The Government's draft 1997 budget, which had been revised by
a conciliation commission of legislators and Government representatives,
was approved by the State Duma in January after the four readings
required by law. After the first two drafts were rejected, the
Government added about US$6 billion in spending and new tax breaks
to stimulate economic activity. The changes swung the votes of
the Communist Party of the Russian Federation (Kommunisticheskaya
partiya Rossiyskoy Federatsii--KPRF) and its allies, who had lobbied
for additional government spending, but democratic parties such
as Yabloko voted against the budget because of inadequate fiscal
restraint. The Federation Council (the upper house of the parliament)
approved the budget but expressed serious doubts about the realism
of its revenue projections.
As approved, the budget was based on projections of 11.8 percent
annual inflation and GDP growth of 2 percent for 1997. The planned
budget deficit of about US$16.5 billion would be 3.5 percent of
the projected GDP figure. However, Russian and Western experts,
including Russia's minister of economics, Yevgeniy Yasin, called
the GDP projection greatly exaggerated. Yasin's ministry forecast
zero GDP growth for 1997, with recovery beginning in 1998 at the
earliest. The budget did not include a 10 percent increase in
Russia's minimum wage that went into effect in January 1997 and
that would entail additional state spending. In 1996 the government's
issue of bonds with interest rates exceeding 100 percent had complicated
the budget-balancing process by tripling the government borrowing
of 1995 and inflating the public debt from 16 to 26 percent of
GDP.
Economic indicators for the first half of 1996 were mostly negative.
According to an independent Russian survey, compared with December
1995 the real volume of production and services dropped by 11
percent, the number of employed persons dropped by 4 percent,
the real volume of capital investment dropped by 54 percent, the
average prices of manufactured products and purchased products
rose by 14 percent and 25 percent, respectively, and the average
wage rose by 10 percent. In the first nine months of 1996, total
GDP dropped by 6 percent, and industrial output dropped by 5 percent
compared with the same period in 1995. Light industry, construction
materials, and machine building showed the sharpest drops in production,
and domestic investment declined by 17 percent.
In the first nine months of 1996, agricultural production dropped
by 8 percent. Russia's 1996 grain harvest was 69 million tons,
one of the smallest in the last thirty years and only a 9 percent
improvement over the disastrously low harvest of 1995. An estimated
three-quarters of farms lost money, and only two-thirds of 1996
budget allotments for farm support were paid out. As of early
1997, the restructuring of the agricultural system was one of
the major unfulfilled promises of Yeltsin's presidency.
Russia's foreign trade position did not improve significantly
in 1996. Membership in the World Trade Organization (WTO--see
Glossary), a top priority for acceptance in the international
free market, continued to be delayed. Although some aspects of
Russia's trade policy have been liberalized substantially, the
WTO cited continuing price controls on oil, state subsidies to
major industries, protective import duties, and abrupt changes
in tariff and tax policies for foreign companies as defects that
precluded Russia's membership. According to the WTO, stability
and transparency were the major missing elements in Russia's trade
policy. Although the United States pledged support for Russia's
admittance in 1998, prospects were unclear in early 1997.
Foreign investment for 1996 was forecast to reach only slightly
more than half the 1995 figure (US$1.5 billion), mainly because
of continuing uncertainty in Russia's standards for taxation,
accounting, and property rights. In October 1996, an international
market consulting firm placed Russia below Brazil, Indonesia,
Mexico, and Venezuela in desirability as an emerging market opportunity
for investors. Corruption, fraud, and bureaucratic delays were
cited as the main factors in that ranking. In November the failure
of a Russian space mission to Mars lost foreign investors about
US$180 million, as well as damaging the stature of a key remaining
high-technology industry. In April the space program suffered
further damage with the delay of the new Russia-United States
International Space Station because the Government had not funded
a critical aerospace contractor.
On the positive side, in October foreign investors paid nearly
US$450 million for shares in Gazprom, the natural gas monopoly.
About forty joint ventures were active in the oil industry in
1996, accounting for about 8 percent of Russia's total extraction.
Foreign investment in Russia's extraction industries was expected
to expand significantly beginning in 1997 as the State Duma expedited
approval of the production-sharing agreements that are the basis
of foreign participation.
In November 1996, Russia issued its first set of bonds on the
European market after receiving an unexpectedly high bond rating
from Western credit agencies. Following Russia's first bond rating
since 1917, the bonds drew US$1 billion from United States, European,
and South Korean investors attracted by the 9.25 percent interest
rate. A place in the bond market was expected to help Russia raise
money from other international sources. In March 1997, the issue
of a second set of bonds, this time denominated in German marks,
fetched US$1.2 billion. A third issue was planned for later in
1997; like the second, it was designated to pay overdue pensions
and salaries.
In late 1996 and early 1997, labor groups showed some signs
of ending their remarkably passive reaction to the chronic wage
arrears in many of Russia's industries. (In March 1997, the total
wage debt was estimated at US$8.5 billion.) Through most of 1996,
with a few notable exceptions such as the coal workers, labor
in Russia followed the Soviet pattern of expecting the government
rather than enterprise managers to remedy their plight.
The older trade unions, many of whose leaders had been hand-picked
by plant managers in the Soviet era, generally discouraged strong
actions against employers in the early and mid-1990s. Unions formed
after 1985 suffered from Russia's total lack of labor legislation,
which allowed the government and enterprise officials to ignore
union claims on behalf of the workers. Experts pointed to the
lack of pressure from a united labor movement as a key reason
the Yeltsin government failed to address the problem of overdue
wages.
In the second half of 1996, strike activity intensified somewhat.
According to government statistics, 356,000 workers at more than
3,700 enterprises participated in strikes in the first nine months
of 1996, with the largest number of strikes in educational institutions
and coal mines. (Doctors, miners, nurses, and teachers were the
workers hardest hit by wage arrears.)
In November 1996 and March 1997, nationwide strikes and demonstrations
called by the Federation of Independent Trade Unions of Russia
(Federatsiya nezavisimikh profsoyuzov Rossii--FNPR), the largest
such organization in the country, failed to galvanize widespread
support. In the March action, an estimated 2 million workers struck
or demonstrated, but more than 80 percent of those were teachers,
and the FNPR had predicted substantially heavier participation.
Observers attributed the low turnout to apathy, lack of trust
in the FNPR, and the expectation that Yeltsin's recent government
reorganization would improve the situation.
The democratization of the political system has followed an
equally bumpy path in Russia's first post-Soviet years. As with
economic reform, some elements of political reform appeared under
Gorbachev in the late 1980s. The policy of glasnost allowed public
discussion of hitherto taboo subjects, including the wisdom of
government economic policy in a time of serious economic decline.
As the Soviet Union's regional jurisdictions clamored for various
degrees of sovereignty, Boris Yeltsin led Russia's challenge to
Soviet authority in a number of areas. In 1991 Russians elected
Yeltsin president of their republic in a free election; the coup
against Gorbachev in August 1991 made Yeltsin the most powerful
man in Russia, which shortly became an independent state.
From the very beginning, Yeltsin's attempts to promulgate reform
programs from the office of the presidency encountered stiff opposition
from antireform factions in the legislative branch. Beginning
in 1994, that opposition was centered in the State Duma. After
Yeltsin used military force to overcome an open rebellion against
his dismissal of the parliament in October 1993, he achieved passage
of a new constitution that prescribed a strong executive and reduced
the powers of the legislative branch. However, the first two legislative
elections, in 1993 and 1995, seated large numbers of deputies
from the KPRF, the Liberal-Democratic Party of Russia (Liberal'no-demokraticheskaya
partiya Rossii--LDPR), and other nationalist and antireform groups.
Under worsening economic conditions, a seemingly unstoppable crime
wave, and a highly unpopular war in Chechnya, Yeltsin's popularity
plummeted in 1995 and early 1996. His response was a contradictory
series of personnel and agency shifts at top government levels,
together with presidential decrees that often reversed the movement
toward democratic governance. By early 1996, virtually all reformist
officials had been removed from positions of influence, and a
group of hard-liners, led by presidential security chief Aleksandr
Korzhakov, Deputy Prime Minister Oleg Soskovets, and Minister
of Internal Affairs Anatoliy Kulikov, seemingly had the president's
ear.
By that time, Yeltsin's authoritarian use of executive power
had combined with the Chechnya imbroglio to lose him the support
of the democratic and reformist factions that had been active
promoters of early reform policies. As he engaged in an uphill
presidential campaign, Yeltsin made lavish promises of government
aid to unemployed workers and state enterprises, and allegations
of corruption in the latest phase of the privatization program
forced him to remain silent about that aspect of his administration.
The 1996 presidential campaign yielded two distinctly opposed
theories of governance: the KPRF's frank appeal for return to
the central rule of Soviet days and Yeltsin's sometimes timid
commitment to democratization and economic reform. In general,
however, the national party system remained quite fluid. Although
a large number of parties with national constituencies emerged,
much shifting occurred among the smaller parties as coalitions
formed and dissolved. Some forty-three parties and coalitions
registered for the 1995 legislative elections. In 1995 Yeltsin
attempted to dominate party politics by forming two nominally
opposed parties with essentially pro-administration positions,
but his strategy was unsuccessful. The one major party that emerged
from his manipulations, Our Home Is Russia, captured relatively
few seats in the State Duma in 1995 but retained national standing
as a major party because of its identification with Chernomyrdin.
Of the proreform opposition groups, the Yabloko coalition remained
the strongest in 1996, but its influence was limited because it
refused to join forces with other reform parties. The candidates
of Yabloko and other reformist groups fared poorly in the first
round of the 1996 presidential election. Meanwhile, the KPRF had
developed a unified and loyal following among Russians disillusioned
with Yeltsin and nostalgic for the Soviet past.
As the presidential campaign developed, the KPRF candidate,
former CPSU functionary Gennadiy Zyuganov, emerged as the prime
competitor of Yeltsin. The president used his access to broadcast
and print media (which feared the repression that would result
from a KPRF victory) to climb steadily in the polls. In the first
round, Yeltsin defeated Zyuganov narrowly. Before the second-round
faceoff with Zyuganov, Yeltsin dismissed the most visible hard-liners
in his administration, added popular third-place finisher Aleksandr
Lebed' to his administration, and coaxed lukewarm endorsements
from Yabloko and other reformist parties.
In the second round, Yeltsin easily defeated Zyuganov, a dull
campaigner who could not convince undecided voters that a KPRF
victory would not mean a return to the days of Soviet repression.
In what amounted to a contest between anti-Yeltsin and anticommunist
sides, Yeltsin attracted an estimated 17 million voters who had
voted for Lebed' or Yabloko candidate Grigoriy Yavlinskiy in the
first round, and for whom Yeltsin now was the lesser of two evils.
To gain acceptance as the main opposition faction at the national
level, after the presidential election the KPRF attempted to broaden
its constituency by forming a coalition called the National Patriotic
Union of Russia. The coalition included the leftist and nationalist
groups that had supported Zyuganov's 1996 presidential bid. To
improve its national image from one of disruption to one of constructive
cooperation, the coalition softened its antigovernment rhetoric.
A prime example of the new approach was KPRF support of the Chernomyrdin
government's draft budget in the State Duma deliberations of December
1996-January 1997.
The KPRF found this position tenable while Yeltsin was ill and
the moderate Chernomyrdin had a strong position in the Government.
However, the Government reorganization of March 1997 gave new
power to reformists with whom the KPRF shared little common ground.
The party also showed signs of a split between moderates and radicals
who rejected compromise. Meanwhile, young Russians showed little
interest in joining the KPRF, which offered few constructive ideas
about Russia's future and whose membership increasingly was based
on an old guard of Soviet-era activists.
Beginning his second term, Yeltsin filled his new cabinet with
individuals with reformist credentials. Free-market advocate Aleksandr
Livshits was appointed minister of finance, and reformist Yevgeniy
Yasin retained his position as minister of the economy. In another
indication that economic reform would continue, Yeltsin named
reformist Al'fred Kokh as deputy prime minister for privatization.
Retained from the previous Government were Minister of Foreign
Affairs Yevgeniy Primakov (a 1996 appointee), recently appointed
Minister of Defense Igor' Rodionov, and hard-line Minister of
Internal Affairs Anatoliy Kulikov.
The Ministry of Environmental Protection and Natural Resources
was redesignated the Ministry of Natural Resources; environmental
issues were shifted to a new, subcabinet agency, the State Environmental
Protection Committee, headed by Viktor Danilov-Danil'yan, who
had been minister of environmental protection and natural resources
in the first Yeltsin administration. The only minister affiliated
with the KPRF was Aman Tuleyev, a strong proponent of reintegration
of the CIS states, who was appointed to head the Ministry of CIS
Affairs.
In August 1996, Chernomyrdin listed among the new Government's
goals a dramatic reduction of the state bureaucracy, including
the elimination of twenty-four ministries and agencies. However,
no streamlining occurred until March 1997, when Yeltsin dropped
three of his deputy prime ministers and announced a large-scale
Government reorganization as a remedy for what Yeltsin admitted
was poor performance by his second-term appointees. The new, smaller
Government was to include eight deputy prime ministers (compared
with twelve previously), twenty-three ministries (three of which
were headed by deputy prime ministers, and a reduction of one
from the previous organization), sixteen state committees (compared
with seventeen previously), and twenty other federal agencies.
A key appointment in this period was Boris Nemtsov as deputy
prime minister in charge of social issues (including the crisis
of wage and pension arrears) and the extremely prob-lematic reform
of state monopolies and housing subsidies. As governor of Nizhniy
Novgorod Oblast, Nemtsov had gained international recognition
for his brilliant regional economic reforms. Nemtsov's reputation
for honesty also was expected to improve the tarnished image of
Yeltsin's administration.
The Government reorganization process required much more time
than expected because factions struggled to gain coveted posts
and no qualified persons could be found for others. Reportedly
at least twelve individuals refused appointments to head ministries
and committees. The reorganization also sharpened the power struggle
between the Government and the State Duma, the main political
bastion of numerous special interests that the initiatives of
Chubays and Nemtsov promised to attack, and whose patron, Chernomyrdin,
now was fading.
In June 1996, the appointment of former general Aleksandr Lebed'
as head of the Security Council improved the prospects of an already
promising political figure. In this position, Lebed' remained
in the public eye by making controversial speeches on matters
of policy and by negotiating what turned out to be the conclusive
cease-fire of the Chechen conflict. Lebed' had a base of avid
supporters who craved charismatic, assertive leadership. Unlike
most other Russian government figures, he created a positive image
on television, which by 1996 was the most important source of
news for most Russians. In October Yeltsin responded to continued
criticism from Lebed' by dismissing him from the Security Council.
In the months that followed his dismissal, Lebed' polished his
public image in Russia and abroad. He began preparations for a
future presidential campaign by seeking funds for future political
activities, and by traveling to the United States and Western
Europe. Although he virtually disappeared from the pro-Yeltsin
television networks after his dismissal, in early 1997 polls indicated
that Lebed' remained the most popular political figure in Russia.
In March he established a new opposition party, the Russian People's
Republican Party, which he described as an alternative to the
KPRF and the ruling elite.
Early in Yeltsin's second term, the urgency of the Chechnya
conflict receded as the two sides negotiated the long-term conditions
of the so-called Khasavyurt accords that Lebed' had achieved in
August 1996. The cease-fire was met with great relief by the Russian
people as the end of a long ordeal, and this attitude contributed
to the enduring popularity of Lebed'. In October the Khasavyurt
accords survived the dismissal of their architect; the Chechens
reluctantly continued negotiations after the moderate Ivan Rybkin
was named to replace Lebed' as Security Council chief and head
negotiator on the Russian side. In November Yeltsin announced
the withdrawal of the two Russian brigades that had been designated
for permanent occupation of Chechnya, a concession upon which
Chechen negotiators had adamantly insisted. By February 1997,
all Russian units had been withdrawn. After six Red Cross workers
and six Russian civilians were murdered--apparently by renegade
guerrillas--near Groznyy in December 1996, all international aid
organizations except for the Organization for Security and Cooperation
in Europe (OSCE--see Glossary) removed their personnel from Chechnya.
Unreconciled Chechen guerrilla groups continued kidnappings in
1997, however, and the resettlement of Russian émigrés from Chechnya
promised to strain the already meager resources of Russia's Federal
Migration Service.
In late 1996, Russia took an increasingly conciliatory negotiating
approach with the Chechens, offering agreements restoring trade,
communications, customs relations, and road links and resuming
oil and gas refining and transport. Russia's best hope of keeping
Chechnya in the federation in 1997 was economic leverage, because
the war had left the republic decimated and without international
ties and because the infrastructure already existed for Russia
to restore Chechnya's most vital industry, oil refining. The main
Russian economic negotiator was Boris Berezovskiy, a controversial
automotive and banking mogul who had contributed a large sum to
Yeltsin's reelection campaign.
The ultimate status of Chechnya and the payment of war reparations
remained unresolved in early 1997. The Khasavyurt accords called
for a five-year waiting period before deciding the independence
issue, but Russia insisted that the territorial integrity of the
federation must not be threatened. In January 1997, Chechnya conducted
its first presidential and legislative elections; international
observers described the election procedure as fair and open, although
refugees from Chechnya, including an estimated 350,000 Russians,
were not permitted to vote. Russia's foreign policy establishment
saw Aslan Maskhadov, the former military leader who easily won
the presidency, as a potential partner in further negotiations,
unlike the more radical presidential candidates. However, all
sixteen presidential candidates based their platforms on Chechnya's
full independence under the name "Republic of Chechnya-Ichkeria,"
and Maskhadov refused to take his rightful seat as a republic
governor in Russia's Federation Council. Russia's official response
to the January elections was muted; by March, the terms of a treaty
of "peace and agreement" were under serious discussion.
As Yeltsin began his second term, the strength of the president's
political position and the nature of his intentions remained unclear.
Yeltsin ended his first term on an ominous note by retreating
completely from public view immediately after his election victory.
The heart attack that Yeltsin suffered between the two rounds
of the election was identified only later as the cause of his
disappearance.
Beginning with the first round of the presidential election,
Yeltsin's physical condition exerted a growing influence over
the political atmosphere in Russia. In the fall of 1996, news
of the president's very serious heart condition intensified speculation
about the identity of likely successors. As Yeltsin maintained
a limited public schedule in that period, three figures, Chernomyrdin,
Lebed', and Moscow's very popular mayor, Yuriy Luzhkov, jockeyed
openly for advantage in the anticipated post-Yeltsin era--although
Chernomyrdin clearly lacked the political appeal of his potential
rivals. Those maneuvers continued after Yeltsin's heart surgery
in November.
By early 1997, Russia's apparent lack of leadership caused intense
concern and speculation in the international community, and Yeltsin's
popularity again plummeted as workers and pensioners remained
unpaid. In March 1997, Yeltsin used his annual state of the federation
speech to the State Duma to reassure domestic and foreign opinion
and to reassert his presidential power--a goal that he achieved
by delivering a forceful and coherent speech. Accusing the Government
of failing to execute his commands, Yeltsin repeated his unfulfilled
1996 promises of wage and pension payments, accelerated economic
reform, and more efficient government.
During Yeltsin's absence, another figure bore the brunt of opposition
attacks on the administration. In 1995 and early 1996, Yeltsin
had dismissed reform economist Anatoliy Chubays from two high-level
economic positions in response to strong criticism from antireform
factions. However, after directing Yeltsin's successful 1996 presidential
campaign, Chubays was rewarded with the chief of staff position
in Yeltsin's second administration, at the same time increasing
the prospects that the pace of reform would increase.
Although too unpopular to have a realistic chance at the presidency,
Chubays maneuvered effectively within the Yeltsin administration.
He formed an alliance with Yeltsin's ambitious daughter, Tat'yana
Dyachenko, who was rumored to have substantial influence over
her father's policy decisions. The work of Chubays was widely
seen in the dismissal of the Aleksandr Korzhakov coterie in June
and of Aleksandr Lebed' in October. Chubays was credited with
maintaining some sort of order during Yeltsin's convalescence
in the early stages of the second administration, even as Chubays's
many enemies spread rumors of illegal campaign funding and links
with organized crime.
Despite speculation that Yeltsin would limit Chubays's power
by increasing the prestige of rivals--a technique Yeltsin had
used throughout his presidency--in the Government reorganization
of March 1997 Yeltsin advanced Chubays to the positions of deputy
prime minister in charge of economic affairs and minister of the
economy. Chubays now had direct control of the governmental restructuring
that Yeltsin prescribed to end bureaucratic gridlock, and the
new faces that Yeltsin appointed at that time improved the prospect
that the new minister would be able to accelerate economic reform
in 1997.
In July 1996, experts had seen Yeltsin's creation of a civilian
advisory Defense Council as an effort to balance the power that
Lebed' had gained as chief of the Security Council. In October
the head of the Defense Council, Yuriy Baturin, supplanted Lebed'
as the primary architect of military reform, dismissing six top
generals and reassigning several who remained. By the end of 1996,
Baturin was in a bitter battle with defense minister Rodionov
for authority over reform policy. By March 1997, Rodionov's position
in the administration was reported to be quite tenuous.
Late in 1996, another extraconstitutional organ was formed in
the Yeltsin administration: a permanent, four-member Consultative
Council that included the president, the prime minister, and the
speakers of the two houses of the Federal Assembly. The council
was to meet twice a month in an effort designed to smooth differences
between the two branches of government. The inclusion of the State
Duma speaker brought a prominent KPRF deputy, Gennadiy Seleznev,
into a top advisory group--a move calculated by Yeltsin and Chubays
to either divide or conciliate the strongest of the opposition
parties. The fourth member of the council was Yegor Stroyev, speaker
of the Federation Council and usually a Yeltsin supporter. During
Yeltsin's illnesses, Chubays represented the president at council
meetings.
Already in the mid-1990s, the executive branch contained numerous
directorates and commissions answering only to the president.
In 1996 the addition of extraconstitutional governing bodies such
as the Defense Council and the Consultative Council continued
Yeltsin's propensity to govern by decree and outside constitutionally
prescribed lines of power. According to some experts, the existence
of seemingly redundant presidential policy-making groups was a
new manifestation of Russia's long tradition of arbitrary rule;
according to others, such organs were necessary to circumvent
the gridlock of opposition in the State Duma.
In the fall of 1996, Yeltsin's illness brought demands from
all political factions for clarification of the 1993 constitution's
vague language on replacing a disabled head of state: the conditions
for such replacement are listed in the constitution, but the authority
to make the decision is not specified. In this case, Yeltsin responded
by temporarily delegating to Prime Minister Chernomyrdin his authority
as commander in chief of the armed forces, head of internal security,
and custodian of the codes needed to unleash a nuclear attack.
Within hours of his successful heart bypass surgery in November,
Yeltsin publicly reclaimed full control, apparently seeking to
end the impression of a power vacuum in Moscow. In the months
that followed, however, government assurances of Yeltsin's continued
competence met increasing skepticism as the president appeared
only in carefully edited news film. In the first months of 1997,
KPRF deputies introduced motions in the State Duma to impeach
Yeltsin on health grounds, and the Duma discussed constitutional
amendments limiting the powers of the president.
Between September 1996 and March 1997, Yeltsin's administration
faced a new political challenge when a series of regional elections
provided the KPRF and its nationalist allies another opportunity
to weaken Yeltsin's political base. Fifty-two of Russia's eighty-nine
subnational jurisdictions were to elect chief executives during
that period, and all of those executives are ex officio members
of the Federation Council, the upper house of parliament and a
bastion of Yeltsin support until 1997. (The chief executives of
republics are called presidents; those of other jurisdictions
carry the title governor or administrative head.)
Before the elections began, experts identified fifteen of those
constituencies, primarily in the "Red Belt" along the southern
border from the North Caucasus to the Far East, as sure to elect
communist leaders. At the end of 1996, a Yeltsin-appointed incumbent
chief executive had been defeated in twenty-four of the forty-four
elections decided to that point. The KPRF had backed fifteen of
the new officials, and six had had Yeltsin's support. Among the
victors were former vice president and outspoken Yeltsin critic
Aleksandr Rutskoy, who was elected governor of Kursk Oblast, and
Vasiliy Starodubtsev, a central figure in the 1991 coup against
the Gorbachev government, who was elected governor of Tula Oblast.
In most cases, successful candidates took less partisan positions
and were more ready to negotiate with their opposition than experts
had predicted when the elections began. Incumbents generally fared
better in northern and urban regions where economic conditions
were the most favorable. Yeltsin's doubtful health and the rescinding
of his 1996 campaign spending promises hampered some progovernment
candidates. All the chief executives elected in 1996 were expected
to wield greater political power because they now had direct mandates
rather than presidential appointments, and that legitimacy also
would bolster the power of the Federation Council vis-à-vis the
State Duma in the Federal Assembly.
In 1996 the central government's economic and legislative control
of subnational jurisdictions continued to slip away as the power
of regional chief executives increased proportionally. Governors
such as Yevgeniy Nazdratenko of strategically vital Maritime (Primorskiy)
Territory on the Pacific coast and Eduard Rossel' of Sverdlovsk
Oblast in the Urals already had established personal fiefdoms
outside Moscow's control. Nazdratenko openly challenged the national
administration on a number of issues, including the transfer of
a small parcel of his territory's land to China as part of a Sino-Russian
border treaty. In 1993 Sverdlovsk Oblast briefly declared itself
a republic under Rossel'. As of January 1997, Moscow had signed
bilateral agreements, establishing a wide variety of power-sharing
relationships, with twenty-six subnational jurisdictions.
By 1996 regional governments raised 50 percent of taxes and
accounted for 70 percent of government spending in Russia. Although
only fifteen of eighty-nine subnational jurisdictions were net
contributors to the federal budget and sixty-seven relied on federal
subsidies for pensions, in 1996 Moscow still had no centralized
system to account for movement of funds between the federal government
and the regions. Many jurisdictions complained that the 1997 budget
did not allocate sufficient funds to them to compensate for their
tax payments to Moscow. As of March 1997, no subnational jurisdiction
had received a full allotment of federal pension funds, and only
ten jurisdictions had paid their federal taxes in full.
In October 1996, the emergency tax committee was forced to withdraw
its threat of bankruptcy proceedings against the Kama Automobile
Plant (KamAZ), one of the Republic of Tatarstan's largest industries,
for nonpayment of federal taxes. Citing the 1994 power-sharing
treaty between the republic and the federal government, Tatarstan's
president Mintimer Shaimiyev convinced Chernomyrdin that ending
KamAZ's favorable tax status would intrude on the republic's economic
sovereignty.
Experts predicted that tensions between Moscow and the subnational
governments would intensify during the shaping of Russia's new
federal system, especially as that system addresses the question
of who controls the country's vast national resources. After the
regional elections, a loose coalition of jurisdictions that were
net contributors to the federal budget ("donor regions") was in
a position to gain significant economic concessions from the federal
government. At the same time, the eight regional economic associations,
which include all of Russia's eighty-nine subnational jurisdictions
except Chechnya, showed new cohesiveness and also were expected
to gain greater autonomy and attention from Moscow in 1997. Those
associations are: the Far East and Baikal Association; the Siberian
Accord Association; the Greater Volga Association; the Central
Russia Association; the Cooperation Association of North Caucasus
Republics, Territories, and Oblasts; the Black Earth Association;
the Urals Regional Association; and the North-West Association.
In October presidential chief of staff Chubays began a campaign
to reverse the movement toward regional autonomy. Chubays called
for a review of the many regional laws that contravene the national
constitution, in an effort to curtail the autonomy that such legislation
encourages. (Several of the regional constitutions adopted after
1991 contain language contradicting the national constitution,
and the electoral laws of some twenty-seven regions reportedly
violate federal law.) However, the project was postponed because
regional procurators, who would be responsible for such an investigation,
lack sufficient authority over regional officials. After the elections
of 1996-97 gave most regional leaders a popular mandate, the lack
of federal sanctions on subnational jurisdictions violating federal
law became a more significant threat to the integrity of the federation
as well as to human rights and the balance of political power
within jurisdictions. Meanwhile, local and municipal administrations
chafed under restrictions imposed by regional jurisdictions, just
as the latter complained about Moscow's restrictions.
In the post-Soviet period, Russia's foreign policy has shifted
significantly, most often in response to domestic rather than
foreign conditions. The early Yeltsin administration, represented
by Minister of Foreign Affairs Andrey Kozyrev, sought to bring
Russia fully into the community of nations--especially Western
nations--and to dispel the aura of the Evil Empire. The military
and economic competition of the Cold War was replaced by a series
of cooperative agreements with Western powers, including disarmament
treaties, that brought economic and humanitarian aid to Russia.
The vast set of Soviet commitments that spanned the world in the
1980s was reduced in an effort to concentrate limited resources
in the most useful areas.
However, a strong nationalist faction in the parliament and
elsewhere saw such complaisance as the surrender of the preeminent,
rightful role in world politics that had been won in the Soviet
era. This faction, which has been compared with the nineteenth-century
Slavophile movement that sought to protect Russian culture from
the harmful intrusion of Western civilization, has urged that
Russia recapture as much influence as possible in the former Soviet
Union and the former Soviet empire in Central Europe. This process
would discourage the influence of the West in those regions, countering
the ostensible drive of the North Atlantic Treaty Organization
(NATO--see Glossary) to push Russia out of the continent of Europe.
For many advocates of this position, the preferred area of closer
foreign relations is Asia, and a new anti-Western alliance with
China is the focal point.
In the early and mid-1990s, Yeltsin had improved Russia's international
image by participating in several meetings of the Group of Seven
(G-7--see Glossary) as well as his regular summit conferences
with United States presidents. In maintaining such contacts, Yeltsin
attempted to walk a line between making concessions to the West
that would anger Russian nationalists and taking independent positions
that would weaken the Western commitment to aid Russia during
its transition period. As a result of these conflicting demands,
in the mid-1990s Russia's foreign policy positions have been inconsistent,
and Yeltsin, Minister of Foreign Affairs Yevgeniy Primakov, Chernomyrdin,
and other official spokesmen often have issued contradictory statements
on important issues.
On issues such as Chechnya and human rights in Russia, Western
diplomats refrained in 1996 from criticizing Yeltsin for fear
of damaging his prestige at home. Before the August 1996 cease-fire
in Chechnya, the IMF offered Russia the second-largest loan in
the bank's history, and the Council of Europe (see Glossary),
considered a guardian of human rights in Europe, admitted Russia
to its membership despite numerous reports of atrocities in Chechnya
and noncompliance with the council's policy on capital punishment.
However, Yeltsin received substantial criticism from the West
for some policies that failed to comply with international standards.
Among them were the sale of nuclear reactors, submarines, and
other critical items to Iran in violation of international sanctions;
continued dumping and careless handling of nuclear materials by
Russia's civilian and military agencies (criticism coming mainly
from Japan and the Scandinavian countries, which were most directly
affected); and Russia's failure to comply with the arms limitations
of the Conventional Forces in Europe Treaty (CFE Treaty--see Glossary).
Most of the summit meetings of the mid-1990s discussed some or
all of those questions, but few solutions emerged. Early in 1997,
Russia's relationship with Iran had become closer, its nuclear
safety policies remained unchanged, and CFE Treaty modifications
were under discussion.
In the mid-1990s, the major point of conflict in the struggle
over Western influence in Russia was the projected expansion of
NATO into former Warsaw Pact nations of what is now called Central
Europe. In 1995 and 1996, numerous statements by the Russian government
rejected the possibility that countries such as Poland and Hungary
could enter NATO without dire consequences. Russia's statements
predicted that, by isolating and impoverishing Russia, a NATO
presence would in fact reactivate the Cold War. During 1996 government
spokesmen threatened a variety of diplomatic and military reprisals
if NATO membership were enlarged. Most experts labeled Russia's
behavior as gamesmanship aimed at gaining the most advantageous
possible position once an inevitable first round of NATO expansion
occurred.
Despite Russia's threats, in 1996 eleven European countries,
including the three Baltic states--Estonia, Latvia, and Lithuania--reiterated
their enthusiasm for gaining NATO membership. In early 1997, Bulgaria
declared its desire to join, and Georgia, Moldova, and Ukraine
sought closer cooperation with the alliance.
A potentially important change appeared in the Russian position
at the end of 1996. In September the United States had proposed
a charter that would give Russia a special relationship with NATO,
in an attempt to relieve tensions over the expansion issue. In
January 1997, Primakov began to negotiate such an agreement with
NATO secretary general Javier Solana. As negotiations proceeded,
two of Russia's key goals emerged: obtaining more favorable terms
in the CFE Treaty and limiting the NATO military presence in any
new member nation in Central Europe. In keeping with Russia's
position that NATO is an anachronistic leftover of the Cold War,
Primakov and Chernomyrdin demanded a binding treaty obligating
NATO to reform itself from a military to a "political" organization.
As conceived in the West, the agreement would offer Russia consultation
but no veto on NATO expansion decisions; increased presence of
Russian observers at various NATO command levels; and modification
of existing arms reduction agreements to suit Russia's demands.
At the March 1997 Helsinki summit, Yeltsin backed the agreement
as a way around the issue of NATO expansion, which he still called
"a mistake." By that time, Primakov and Solana had agreed on most
of the charter's terms, including a permanent consultative council
for discussion of issues such as nuclear security, crisis management,
and peacekeeping operations. However, Primakov insisted on restricting
the presence of NATO forces in any new member nation, a concession
that NATO refused because it would interfere with the alliance's
basic commitment to mutual defense. Because NATO had set a target
date of July 1997 for the first official invitations to new member
nations, little time was available for conflicting views to be
mediated. (Russia demanded that the signing of the Russia-NATO
charter precede and be separate from the NATO summit that would
announce the invitations.)
During his first term in office, Boris Yeltsin continued the
tradition, begun by Mikhail Gorbachev, of holding regular summit
meetings with United States presidents. The second Strategic Arms
Reduction Treaty (START II--see Glossary) was a product of a 1993
summit with President George H.W. Bush. Western experts saw the
drastic nuclear arms reductions of START II as a way for Russia
to cut military expenses without sacrificing national security,
at a time when nuclear parity was an increasingly expensive proposition.
But as Russia's conventional military forces deteriorated and
funding declined in the mid-1990s, nuclear strike capability assumed
a more prominent place in national security planning. Therefore,
by late 1996 Russian authorities were demanding greater limitations
on sea-based nuclear warheads, in which the United States has
a distinct advantage; greater latitude for deployment of land-based
missiles, in which Russia is strongest; and revision of the START
II restrictions on the multiple-warhead weapons that Russia considers
its most formidable threat.
In October 1996, United States secretary of defense William
Perry met strong resistance when he tried to convince the State
Duma and Ministry of Defense officials in Moscow that START II
ratification would benefit both sides. At the same time, Russia
also delayed finalizing an agreement on classification of anti-ballistic
missiles (ABMs), indicating continuing sensitivity about the prospect
of the United States building a missile interception system that
would negate much of Russia's nuclear strike capacity. Early in
1997, Western defense experts began formulating a START III proposal
that might leapfrog the START II deadlock by eliminating at least
some of the most serious obstacles. But the largest obstacle was
the NATO issue: already in 1995, nationalists and many moderates
in the State Duma refused to even consider START II without assurances
that NATO would not move eastward, and this linkage remained in
early 1997.
In the early stages of Yeltsin's second term, high-level diplomatic
contact with the West was fitful and unproductive. In September
a Moscow visit by German chancellor Helmut Kohl, Yeltsin's most
vocal supporter among Western leaders, failed to bridge the two
countries' differences on sanctions on Iraq (which Russia opposed),
NATO expansion, and conditions for expanded German investment
in Russia. In late December, the first foreign leader to confer
with Yeltsin after his convalescence was China's prime minister
Li Peng rather than a Westerner. At that time, Russia and China
signed new bilateral agreements on cooperation in banking, nuclear
power plant construction, and the sale of two naval destroyers
to China. In early 1997, visits by Kohl and French president Jacques
Chirac to Moscow produced no breakthrough on the NATO expansion
issue.
The Helsinki summit, the first such meeting since April 1996,
yielded agreements on a range of economic matters; Russia was
promised an increased role in the G-7, whose annual meetings were
to be renamed the Summit of the Eight, and Yeltsin received United
States commitments for enhanced investment and integration of
Russia in global markets and support for much-coveted entry into
the World Trade Organization (WTO--see Glossary) in 1998. Yeltsin
pledged renewed support for passage of START II in the State Duma,
and he supported a START III agreement that would further reduce
strategic arms. The two presidents pledged support for ratification
of the 1993 Chemical Weapons Convention, which faced stiff opposition
in the legislatures of both countries. Yeltsin also unexpectedly
accepted an understanding of the Anti-Ballistic Missile Treaty
(ABM Treaty--see Glossary) that would allow the United States
to continue developing a limited ABM system.
Yeltsin's robust performance at the summit also allayed the
health fears that had haunted his second administration. The president
received strong criticism from communist and nationalist factions
for the substantive output of the summit, but experts noted that
Russia's position in the meeting provided little negotiating leverage.
Russia and NATO did cooperate successfully in Bosnia. In September
1996, Primakov expressed Russia's willingness to extend the assignment
of Russian troops to the NATO international peacekeeping force,
IFOR, with which they had functioned smoothly for more than a
year. Russia's continued participation was conditioned on the
lifting of international sanctions against Serbia. The sanctions
ended in October; Russia took an active part in planning the next
phase of the peacekeeping operation. In January 1997, Yeltsin
approved extending Russia's participation through July 1998.
Recovery of the empire of the Soviet Union became a foreign
policy goal of increasing importance in the mid-1990s. In the
Duma elections of December 1995, every party and group mentioned
reintegration of the CIS states in its foreign policy platform.
In 1996 nationalists used a variety of strategies to encourage
the government to extend Russia's influence in the CIS countries.
In three former Soviet states plagued with internal conflict--Georgia,
Moldova, and Tajikistan--Russian troops remained in ostensibly
peacekeeping roles, and Russian negotiators continued to sponsor
talks between hostile groups. Many experts called the diplomatic
activity an insincere effort to achieve stability in areas where
continued conflict was the only justification for a Russian military
presence.
In late 1996, the State Duma overwhelmingly approved a permanent
Russian force in the breakaway Dnestr Moldavian Republic (Transnistria)
in Moldova, claiming erroneously that most of the republic's citizens
are Russian and thus require protection. (A 1994 treaty with Moldova,
which the State Duma never ratified, provided for withdrawal of
all Russian forces.) Early in 1997, Russian officials promised
that forces would be withdrawn when the Transnistria question
was settled, while at the same time encouraging the separatists
to push for full independence.
In December 1996, a Federation Council resolution officially
claimed the city of Sevastopol', located on Ukraine's Black Sea
coast, as Russian territory. This claim continued Russia's post-Soviet
dispute with Ukraine over control of the Black Sea Fleet that
the two countries had inherited from the Soviet Union. Moscow
mayor Yuriy Luzhkov, hoping to gain national stature for future
political advancement, became a main spokesman for the claim on
Sevastopol'. In 1996 Yeltsin and Ukraine's president Leonid Kuchma
had negotiated terms for dividing the fleet, but the new claims
by Russian nationalists threatened to sour the recently improved
relations between Russia and Ukraine. Spurred by Russia's territorial
claims, in January 1997 Ukraine proposed a "special partnership"
with NATO, ratification of which was expected at the midyear NATO
summit.
The bitter border disputes that had erupted with Estonia and
Latvia at the time of those republics' declarations of independence
continued into 1997, although in both cases some concessions were
made in late 1996 and early 1997. As progress was made on territorial
issues, the main sticking point in 1997 was Russia's requirement
that the two Baltic states change their policy against granting
dual citizenship to their Russian populations.
Russia also struggled to maintain as much as possible of its
Soviet-era access to the rich natural resources of the Caspian
Sea, against the claims of former Soviet republics Azerbaijan,
Kazakstan, and Turkmenistan. Allied with Iran, Russia called for
joint jurisdiction of resources by all adjoining states rather
than allocation according to national borders. The latter system,
advocated by the other three former republics, would place most
Caspian oil fields outside the jurisdiction of Iran and Russia.
In October 1996, Russia amended its previous hard-line approach
somewhat, but the issue promised to be under negotiation for an
extended period.
Early in 1996, a customs union agreement was concluded among
Belarus, Kazakstan, Kyrgyzstan, and Russia, significantly reducing
trade barriers within that group (and simplifying the smuggling
of narcotics from Central Asia into Russia). In November 1996,
Russia reversed its recent policy of reducing credits to other
CIS countries, increasing its credit allotment for CIS partners
by about fifteen times in the 1997 draft budget. Those credits
are limited, however, to the purchase of Russian goods. The total
debt of CIS countries to Russia was estimated at US$6 billion,
plus US$3 billion in unpaid energy bills, prior to the credit
extension. Russia's CIS trade figures for early 1997 showed a
decline in most categories, with natural gas accounting for the
bulk of exports within the commonwealth.
Russia's stature in the CIS suffered setbacks in the 1990s as
other CIS nations took independent positions on a variety of issues.
From the beginning, charter members Turkmenistan and Azerbaijan
took very independent positions: contrary to Russia's desire to
maintain a military presence throughout the CIS, Azerbaijan allowed
no Russian troops at all on its soil, and Turkmenistan maintained
joint command of all military units. Kazakstan and Turkmenistan
continued to seek Western support in bypassing the Russian pipelines
upon which they previously had depended for their oil and natural
gas shipments in the Soviet system. Early in 1997, Kazakstan's
president Nursultan Nazarbayev, a consistent and influential advocate
of economic integration of the newly independent states, criticized
Russia's leadership of the CIS, calling for diversification of
control in order to energize the moribund organization.
Belarus, whose president, Alyaksandr Lukashyenka, had pushed
his country toward reunification with Russia, suffered a constitutional
crisis late in 1996. Lukashyenka's bid for authoritarian power
provoked strong nationalist opposition in the parliament of Belarus.
It also brought unfavorable international attention to Russia's
dominant position in the new bilateral relationship established
by the 1996 Community of Sovereign Republics treaty. Unsuccessful
in mediating the dispute between Lukashyenka and the Belarusian
parliament, Russia continued staunch support for Lukashyenka in
early 1997, although Russia's reform factions opposed closer relations
that would require Russia to support Belarus's backward economy.
A new agreement signed by Yeltsin and Lukashyenka in March 1997
reaffirmed the 1996 treaty but increased the controversy in Moscow
between reformers--including Chubays and most of Yeltsin's new
top-level Government appointees--and nationalists, who saw union
with Belarus as the first step in restoring the Soviet Union.
In 1996 Uzbekistan, the strongest of the five Central Asian
CIS states, began a concentrated effort to cultivate commercial
and diplomatic relations with Western countries and Israel. In
May 1996, Uzbekistan's president Islam Karimov criticized the
Economic Cooperation Organization of Islamic nations, of which
Uzbekistan is a member, for its anti-Israeli and anti-United States
positions; then he made a state visit to the United States to
improve bilateral relations. In January 1997, Karimov voiced support
for expansion of NATO.
In November Kazakstan, Kyrgyzstan, and Uzbekistan announced
plans for a Central Asian peacekeeping battalion to be used in
United Nations-sponsored operations and to be trained within NATO's
Partnership for Peace (PfP--see Glossary) program. The new unit's
Western connections were a signal that the wealthiest Central
Asian countries wished to reduce Russia's role in regional security.
Russia responded by seeking joint action with the Central Asian
republics in defending against infiltration by Afghanistan's aggressively
fundamentalist Taliban movement. The Russian gambit gained support
from Karimov and Tajikistan's president Imomali Rahmonov. At the
CIS summit in March 1997, Yeltsin attempted to foster unity and
to reassert Russia's dominance, but Georgia, Kazakstan, Turkmenistan,
and Uzbekistan reiterated their individual national concerns,
complained about the CIS's ineffectiveness, and defended their
right to form relationships outside the context of the full organization.
Yeltsin's chief vehicle for economic reintegration was to be his
Concept for Integrated Economic Development of the CIS, which
CIS foreign ministers refused to discuss pending modification.
In February 1997, NATO secretary general Javier Solana received
a warm reception when he visited Georgia and Moldova. Moldova's
president Petru Lucinschi requested a NATO security guarantee
for the borders of his neutral country, showing concern for the
continued presence of Russian forces in Transnistria. Georgia's
president Eduard Shevardnadze was frustrated after more than two
years of fruitless Russia-brokered negotiations with Georgia's
separatist republic, Abkhazia. The failure to resolve territorial
and refugee issues there postponed Georgia's unification and,
ultimately, its independence from Russian military assistance.
Georgia concluded several bilateral military agreements with NATO
member countries in 1996. In his talks with Solana, Shevardnadze
characterized Georgia as an integral part of the new European
zone of security to be formed once NATO expanded. (Early in 1997,
the Group of Russian Forces in the Transcaucasus began withdrawing
units from Georgia into Russia as part of the overall military
downsizing program.)
Of the countries Solana visited, only Armenia continues to seek
extensive military assistance from Russia. In 1997 Armenia still
was under blockade by Azerbaijan and Turkey, traditionally hostile
Muslim states that nearly surround the country, and Russia supported
Armenia in the Nagorno-Karabakh conflict with Azerbaijan--factors
that made Russia Armenia's only alternative for regional economic
and security assistance.
The appointment of the Arabist Primakov as minister of foreign
affairs in January 1996 continued the turn of Russia's foreign
policy from West to East, and diplomatic activity in the East
increased in 1996--despite official protestations that Russia
seeks a balance between East and West. By the end of 1996, Russia
and China had resolved several of the issues that had split the
major communist powers for several decades, and both sides seemed
intent on forming additional ties in 1997. Meanwhile, accelerated
commercial activity in Russia's Maritime (Primorskiy) Territory
encouraged new agreements between Russia and the two Koreas, and
progress was made in late 1996 in resolving the fifty-year stalemate
with Japan over Russian occupation of four of the Kuril Islands.
New initiatives also went to the prosperous member nations of
the Association of Southeast Asian Nations (ASEAN), expanding
the drive to make Russia a Pacific Rim commercial power. In November
1996, Primakov visited China, Japan, and Mongolia with the stated
goal of improving Russia's position in vital Asian markets. Primakov
visited Iran the following month. Russia also felt that establishing
its identity as an Asian power was crucial because it had been
excluded from several prosperous Pacific Rim trading groups and
from talks on Korean unification. China's rapid emergence as a
world economic power also was a primary concern.
In 1996 Russia saw the presence of Primakov in the Ministry
of Foreign Affairs, Western sanctions against Iraq, and the election
of a hard-line government in Israel as creating conditions in
the Middle East that would favor a return to the Soviet Union's
role as champion of the Arab countries in the region. Russia had
a special interest in freeing Iraq from economic sanctions because
Iraq was to begin repaying its substantial debt to Russia once
oil exports resumed, and lucrative new bilateral deals were negotiated
in 1996. For this reason, in September 1996 the United States
bombing of Iraqi targets and the threat of extended international
sanctions brought harsh criticism from Moscow.
Meanwhile, Russia continued cultivating relations with Iran,
another international pariah. A third Kilo-class submarine went
from Russia to Iran in November 1996, and the transfer of nuclear-reactor
technology continued despite Western objections. In the second
half of 1996, as another token of Russia's importance in the region,
Primakov also sought a more active role in Arab-Israeli peace
talks.
Whatever its relations with foreign countries, however, no foreign
power threatened Russia's security in the 1990s, and domestic
conditions were the key determinant of Russia's future. In the
1990s, Russian society, until recently held together by the forced
observance of Soviet power, seemed to lack any sort of glue that
could be used to combat the forces of economic fragmentation.
In the early post-Soviet years, religion re-emerged as an important
factor in the lives of many Russians, but cultural and intellectual
institutions showed signs of decline (production of art, literature,
and scientific books dropped sharply in the mid-1990s, as did
newspaper publication), and citizens showed little interest in
forming independent civic groups. Despite guarantees of equal
rights in the 1993 constitution, minority ethnic groups have experienced
serious discrimination and even violence in Russia's cities, and
hints of religious intolerance have emerged as well. Social resentments
have festered as the economic status of most Russians deteriorated
and a new elite flaunted its wealth.
The émigré sociologist Vladimir Shlapentokh observed in 1996
that personal gain had become the most important value in Russian
society and that the newly democratized government institutions
offered little authority against dishonest behavior because those
institutions are themselves rife with corruption. The inability
of government to maintain law and order through its democratic
institutions has provoked authoritarian behavior by the Yeltsin
administration, whose security agencies have maintained a large
share of their Soviet-era autonomy.
Optimists point to the next generation of Russians, who will
have formed their civic habits independent of Soviet influence,
as the basis of democratic renewal and a new civil society. The
three orderly and fair national elections of 1993-96 offer some
hope for this prognosis. The relative calm with which Russians
have accepted the agonies of transition has provided an opportunity
for new institutions to develop, but such a passive public attitude
may not bode well for participatory democracy. Western influences,
which were vital to the postcommunist progress of Poland, Hungary,
and the Czech Republic, have penetrated Russia only in random
fashion, and they met increasing resistance in the mid-1990s.
That resistance has dampened the government's commitment to economic
and political reform and obscured the prognosis for the transition
process.
By 1996 the reforms envisioned in 1992 had reached a plateau
quite short of their final goals. Cynicism, corruption, and the
president's long period of inactivity had sapped the momentum
of reform programs, and an entrenched bureaucracy blocked further
initiatives. In 1997 Russia remained an international power in
some respects, but its search for ways to preserve that status
was increasingly uncertain.
March 31, 1997
* * *
In the months following the preparation of this manuscript,
several events of importance occurred. In April 1997, shortly
after the United States Congress ratified the controversial Chemical
Weapons Convention outlawing the manufacture and sale of chemical
weapons, the State Duma refused passage on the grounds that the
cost of destroying Russia's chemical weapons supply, the largest
in the world, was prohibitively high. Although the Duma promised
to reconsider the measure in the fall of 1997, its decision caused
consternation in the United States, which had expected reciprocity
on that issue.
In the spring of 1997, Russia continued to affirm its commitment
to craft a foreign policy independent of international opinion.
In April an official Moscow visit by Iranian head of parliament
Ali Akbar Nateq-Noori--one day after a German court had found
Iran guilty of assassinating exiled dissidents--was met by expressions
of friendship from President Yeltsin. There were indications that
Russia's military and economic deals with Iran, criticized sharply
in the West because of Iran's support for terrorist groups, would
continue or expand. Yeltsin and Minister of Foreign Affairs Yevgeniy
Primakov also expressed support for Syria's position in peace
talks with Israel, expanding Russia's effort to reestablish influence
in the Middle East.
Shortly thereafter, a Moscow summit meeting with Jiang Zemin,
president of China, produced a statement reinforcing the two nations'
"multipolar" foreign policy as a balance against United States
domination of the post-Soviet world. The leaders signed an agreement
to reduce troops and equipment along the Sino-Russian border by
15 percent. The troop maximum was set at 130,000 for each side.
Neighboring countries Kazakstan, Kyrgyzstan, and Tajikistan also
signed the agreement. Yeltsin announced that military-industrial
entrepreneur Arkadiy Vol'skiy would head the Russian delegation
to a new Sino-Russian standing committee on friendship, peace,
and development scheduled to go into operation sometime in 1997.
In April Russia also announced that two new guided-missile destroyers,
previously intended for the Russian naval forces, would be delivered
to China in 1997. However, despite official rhetoric and new agreements,
in mid-1997 a substantial part of Russia's foreign policy establishment
saw China as a stopgap partner until permanent relationships could
be forged with the United States, Western Europe, and/or Japan.
In May 1997, Japan and Russia began high-level defense talks,
Japan dropped its objection to Russia's membership in the G-7
organization, and Russia showed some signs of compromise in the
continuing dispute over four Russian-held islands in the Kuril
chain north of Japan. Based on Japan's change of policy, Yeltsin
participated as a full member in the June meeting of the newly
renamed G-8.
In May Primakov's long negotiations with NATO officials yielded
an agreement defining special status for Russia in NATO in return
for Russia's acceptance of a first round of NATO expansion into
Central Europe. The most difficult obstacle, Russia's demand that
no nuclear or conventional NATO forces be deployed in new NATO
member nations, was overcome by a general statement that neither
nuclear nor conventional forces would be deployed under normal
circumstances. Both sides claimed that the agreement vindicated
their position, although NATO made no firm commitment not to deploy
forces. The centerpiece of the agreement, which Yeltsin signed
in Paris on May 27, is a permanent council consisting of the secretary
general of NATO, a Russian ambassador, and a representative of
the full NATO membership. Although Yeltsin described this council
as giving Russia a veto over NATO decisions, only specific security
issues are to be discussed in the new body. The alliance's major
political decision-making process remains separate. The first
meeting of the council took place in July.
The agreement, officially termed a "founding act," is not legally
binding and did not require ratification by the parliaments of
the signatory countries. Having signed the act, Russia officially
ended its objections to full NATO membership for the Czech Republic,
Hungary, and Poland, which are expected to become full NATO members
in 1999. The agreement also improved the prospect that the Russian
economy would benefit from closer contacts with the West. Public
reaction in Russia was muted, although nationalist politicians
claimed that Russia had sustained a serious diplomatic defeat.
Meanwhile, the status of international arms treaties remained
unclear. In July talks among the thirty signatory nations of the
CFE Treaty--including Russia and all the NATO countries--yielded
Russia some concessions on the ratio of NATO to Russian conventional
arms in Europe. However, four CIS countries--Azerbaijan, Georgia,
Moldova, and Ukraine--had objected that relaxation of CFE restrictions
on Russia's flank quotas for troop deployment in or near CIS countries
would threaten their national security. The final treaty modification
made overall force reductions in Europe but did not include the
limitations on NATO forces in Central Europe that Russia had demanded
in return for approval of NATO expansion.
As of June 1997, Yeltsin had not made a renewed effort to gain
State Duma ratification of the START II agreement, although he
had promised President Clinton at the Helsinki summit that he
would do so. At Helsinki the United States had eased some terms
of START II to improve the treaty's prospects for passage in the
Duma.
In May President Aslan Maskhadov of Chechnya (Chechnya-Ichkeria)
signed a peace treaty with Russia. In the very brief treaty, both
sides renounced the use of force against the other. The official
categorization of the agreement as a peace treaty was a concession
by Russia, which earlier had refused to sign such a treaty with
what it considered an integral part of the federation. The document
did not mention independence for the breakaway republic--a potentially
divisive issue that both sides avoided in the interest of achieving
peace--but the form of the treaty was that used between two equal
states subject to international law, hence a tacit recognition
of Chechnya-Ichkeria's independence.
Russia also signed agreements for economic aid to Chechnya,
and Yeltsin's negotiator Boris Berezovskiy offered several major
concessions, including an official apology for all of Russia's
historical incursions into Chechnya, in an effort to stave off
full independence. Meanwhile, radical Chechen groups continued
kidnappings and terrorist acts, casting doubt on the authority
of the Maskhadov government.
Chechnya continued to occupy a critical position in Russia's
pipeline politics, which became increasingly complex in the mid-1990s
as more countries sought participation in the oil wealth of Azerbaijan
and Kazakstan. As its price for allowing oil to flow through Chechnya
en route to export from Novo-rossiysk on the Black Sea, Chechnya
demanded recognition as a full partner in the endeavor. Because
an alternative line through Georgia and Turkey would eliminate
both Novo-rossiysk and Chechnya--hence all Russian participation--from
lucrative new shipments, in July Russia signed a trilateral agreement
with Azerbaijan and Chechnya, granting Chechnya an equal role.
Income from oil shipments was expected to be an important element
in stabilizing Chechnya's still rocky internal security situation.
The international Caspian Pipeline Consortium, founded in 1992
to bring oil from Kazakstan to the West, has been plagued by internal
friction among partner companies, which represent six countries
(Britain, Italy, Kazakstan, Oman, Russia, and the United States).
In early 1997, however, the consortium showed signs of agreement
on the Russian section of a new line that would deliver oil from
Kazakstan's Tengiz fields to Novoros-siysk. In April Yeltsin signed
the December 1996 agreement on division of shares among the consortium
partners. Increased United States activity in the region's new
oil fields was a major reason that Russia signed the trilateral
pipeline agreement.
Russia's relations with other CIS countries continue to be unsettled.
In April both houses of Russia's Federal Assembly ratified the
treaty permitting long-term deployment of Russian forces in Armenia.
This move caused alarm in neighboring Azerbaijan (still fighting
and negotiating with Armenia over Nagorno-Karabakh), Georgia (through
which additional Russian troops would pass en route to Armenia),
and Turkey (near whose border additional Russian troops might
be stationed). Disclosures of secret deliveries of Russian arms
to Armenia in 1994-96 already had alarmed Azerbaijan, and the
military treaty seemingly committed Armenia to a long term as
a Russian satellite. However, the terms of the July 1997 treaty
with Azerbaijan implicitly reduced the prospect of future Russian
support for Armenia in the Nagorno-Karabakh conflict. In May a
friendship treaty with Ukraine resolved division of the Black
Sea Fleet and jurisdiction in Sevastopol', the fleet's largest
port, among other treaty provisions.
Meanwhile, other CIS countries continued to deemphasize CIS
(largely Russian) investment and trade agreements in favor of
Western and Japanese deals with more favorable conditions. According
to an April 1997 report, 90 percent of Kazakstan's enterprises
had at least some investments from non-CIS sources. Because Kazakstan's
president Nazarbayev was a staunch supporter of CIS integration,
this statistic was especially bad news for Russia's efforts to
bind together and dominate the organization. In 1997 Russian authorities
also were alarmed by an incipient trilateral agreement among Azerbaijan,
Georgia, and Ukraine, which began cooperating in several critical
areas of security and economics where Russia had enjoyed substantial
influence.
In May 1997, Yeltsin's Security Council completed a long-awaited
national security doctrine. The document, unpublished but leaked
extensively, included economic, foreign-policy, and military elements
in a general description of Russia's present security situation
and its primary goals. Improvement of domestic economic and social
conditions, rather than geopolitical advancement, was listed as
the primary requirement for enhanced national security. The most
aggressive element of the statement was a revocation of Mikhail
Gorbachev's pledge that the Soviet Union never would initiate
the use of nuclear weapons in a war. The new stance was described
by Western experts as a volley in the diplomatic conflict over
NATO expansion and a reflection of the acute deterioration of
Russia's conventional forces. Because the legislative branch had
not been consulted in the creative process, experts doubted that
the anti-Yeltsin State Duma would grant the approval necessary
for the doctrine to become official.
Russia's defense establishment remained unsettled in mid-1997
after Yeltsin, long dissatisfied with the pace of military reform,
fired Chief of Staff Viktor Samsonov and Minister of Defense Igor'
Rodionov. General Igor' Sergeyev was named to replace Rodionov.
At the same time, Yeltsin created two new military reform commissions.
The first, headed by Prime Minister Chernomyrdin, was to deal
with military construction; the second, headed by First Deputy
Prime Minister Chubays, was to deal with military finances. Experts
saw these moves as a victory for civilian officials who advocated
reassigning the military's "hidden reserves" rather than allocating
additional funds for military reform. In July Yeltsin outlined
a comprehensive plan for reducing the military and consolidating
the five branches into two, again emphasizing reallocation of
existing resources. The drafting procedure and content of the
plan attracted strong criticism from government and military officials.
Russia's internal security situation also remained unstable
in mid-1997 as the country's crime wave continued. The Ministry
of Internal Affairs (MVD) reported a reduction of 12 percent in
overall crime in the first quarter of the year, with substantial
drops in murders, assaults, thefts, and robberies. However, there
was no evidence of a reduction in mafiya protection activity and
the corruption and crime associated with it. The 7,500 murders
committed in 1996 were the most ever for a single year. Meanwhile,
the MVD's "Clean Hands Campaign" reported that in 1996 some 21,000
police officials had been fired because of misconduct, including
mafiya connections. Capital punishment continued to be a sensitive
political issue: although Russia was obligated by its 1996 admission
to the Council of Europe to end capital punishment, the crime
wave continued to bolster strong public feeling against such a
change. Human rights organizations estimated that 140 people were
executed in 1996, the fourth-largest total in the world.
The prison system continued to suffer grave problems in 1997.
In April an Amnesty International report listed torture, lack
of bail, acute crowding, epidemics of tuberculosis, and long periods
of pretrial detention as frequent conditions in Russia's prisons
and jails. An estimated 300,000 prisoners (up from 233,000 in
1994) were in pretrial custody, which lasted for an average of
ten months. In mid-1997 the Government announced an amnesty program
that would affect as many as 440,000 Russian prisoners, targeting
mainly those in pretrial detention. Because Russia's incarceration
rate was about ten times that of West European nations, its 1997
prison budget was much higher than its health care budget. Prison
reform received little support either from Minister of Internal
Affairs Anatoliy Kulikov or from the majority of State Duma deputies.
Overdue wages were another continuing result of the national
budget deficit. By midyear Russia's workers were owed an estimated
US$9.5 billion, and the amount continued to grow. Although the
nationwide labor shutdowns called by unions in November 1996 and
March 1997 had failed to attract wide support, the number of local
shutdowns increased noticeably in the first half of 1997. Miners,
doctors, and teachers blockaded roads and railroads and occupied
administrative buildings to protest continued wage arrears. Teacher
strikes affected nineteen of Russia's eighty-nine subnational
jurisdictions, and only fifteen jurisdictions did not owe money
to their teachers.
Partly because of low budget allocations for health, in 1997
new reports indicated that Russia's health crisis was worsening.
Although the life expectancy for males increased from 57.3 years
to 59.6 years between 1994 and 1996, the drinking and smoking
habits of Russians, together with continued air pollution in many
areas, kept mortality rates from cardiac and circulatory diseases
more than twice as high as those in the United States. The incidence
of infectious and parasitic diseases continued to increase. Although
a major diphtheria vaccination program in 1995-96 radically reduced
the incidence of that disease, tuberculosis cases increased sharply,
especially in Russia's prisons. In 1997 the minister of health
predicted that sexual promiscuity and drug addiction would cause
800,000 new cases of HIV infection by the year 2000.
Meanwhile, the official government population prediction for
2010 called for a decrease of 7.3 million people, and one Russian
expert predicted a decrease of 12 million by that year. In that
period, fertility was expected to decline because of health problems
among women of childbearing age and because of the overall aging
of the population.
The overall economic situation continued to be overshadowed
by the Government's inability to balance its budget. Continuing
its effort to improve tax collection--the most often cited way
of paying overdue state salaries and pensions--in May the Chernomyrdin
government submitted a new tax code to the State Duma for approval.
Under Yeltsin's implicit threat to dissolve the Duma, the body
gave preliminary approval to the code in June. Meanwhile, major
enterprises continued to avoid full tax payment. According to
an April 1997 State Taxation Service report, Gazprom, the natural
gas monopoly, used 140 separate bank accounts to shelter its assets.
Of the Government's list of eighty leading tax-evading enterprises,
fifty-three were in the fuel and energy industry.
Only 57 percent of projected revenues were collected in the
first quarter of 1997, leaving arrears of US$12 billion, and only
63 percent of budgeted expenditures were made. By May the Government
owed an estimated US$2.2 billion in pensions, US$2.3 billion in
wages to state workers, and US$1.4 billion in child support allowances.
The shortfall also reduced economic investment, which in the first
half of 1997 was only about 95 percent of the amount invested
in the same period of 1996.
In response to the shortfall, Minister of Finance Anatoliy Chubays
submitted a proposal to the State Duma for sequestration of allotted
funds, warning that the Government could not continue functioning
if major cuts were not made. The revisions called for reducing
spending by US$19 billion. Despite strong and widespread opposition
to the level and allocation of the cuts, in June the Duma adjourned
for its summer vacation without submitting an alternative plan.
Meanwhile, the "capital flight" of hard currency (see Glossary)
from Russia continued at a rapid rate in 1997. International police
authorities estimated that US$1 to US$2 billion dollars left the
country every month, much of it connected with illegal activity
and invested abroad by Russian émigrés. Experts identified this
trend as a sign of continuing low confidence in the domestic economy.
For the first six months of 1997, Russia's GDP shrank by 0.2
percent, casting doubt on Yeltsin's July assertion that the economy
had "turned the corner." Positive economic news of early 1997
included the continuing reduction of inflation, which reached
an annual rate of 14.5 percent in June--the lowest rate since
Russia's independence. Also, the reorganization of the Government
in March caused the IMF to resume monthly payments on Russia's
US$10 billion loan, which had been suspended since December. The
World Bank also announced a two-year loan of US$6 billion to help
pay overdue wages and pensions.
In April a series of presidential decrees moved Government policy
closer to privatization in some sectors, although strong political
support for the giant monopolies in the State Duma guaranteed
that Deputy Prime Minister Boris Nemtsov would have a hard struggle
in breaking them down. According to the new privatization goals,
Government subsidies of housing and municipal services, which
were budgeted at US$27 billion in 1997, were to be reduced. (The
average Russian paid only 27 percent of such costs in 1997.) According
to a sliding scale, subsidies would reach zero in 2003, although
some state housing support would remain for the neediest individuals.
In the spring of 1997, local increases in utility and housing
costs brought demonstrations in St. Petersburg, and Moscow's powerful
mayor, Yuriy Luzhkov, objected strongly to the national proposal.
Provisions were made for substantial modification of the pricing
and/or structure of the state-controlled electric power industry
and the railroad network, and Yeltsin ordered the sale of 49 percent
of the telecommunications giant Svyazinvest, division of which
was one of the most controversial privatization issues. In July
25 percent of total Svyazinvest shares were won at auction by
a group including Russia's Uneximbank and German and United States
investors. Because of the backward state of Russia's telephone
system, telecommunications is considered potentially one of Russia's
largest growth industries. The results of the Svyazinvest auction,
which Boris Nemtsov touted as fully free and equitable, set off
loud protests from the powerful business interests that failed
to acquire shares. The issue threatened to split the large-business
bloc that had supported Yeltsin before and after the 1996 election.
Russia's nineteen railroad companies, which accounted for 78
percent of freight traffic and 40 percent of passenger traffic
in 1997, were to be removed from direct control of the Ministry
of Transportation, under whose management fast-rising railroad
fees had added enormous amounts to the overhead of railroad-dependent
industries such as steel and coal. At the same time, rail customers
owed the lines an estimated US$1.1 billion in 1997, and the companies'
equipment was in desperate need of modernization.
In May Yeltsin announced that Gazprom henceforth would be run
by a state commission, depriving the gas monopoly of the financial
freedom that had gained it billions of dollars of untaxed profits.
Yeltsin already had stripped Gazprom of its exclusive right to
develop new natural gas deposits, and the Government now expected
to recover much of Gazprom's unpaid taxes through the new commission.
Prime Minister Chernomyrdin remained a protector of the industry's
special status, however.
In April Yeltsin renewed his appeal for Russia's consumers to
"buy Russian" to support the domestic economy in the face of increased
consumption of imported consumer goods. However, Russian manufacturers
faced a circular dilemma: consistently low quality kept the demand
for Russian goods from expanding, but firms were unable to improve
quality without new profits or increasingly scarce government
subsidies.
In politics, reformist members of the Kremlin's younger generation
advanced in Yeltsin's Government reorganization. Boris Nemtsov,
thirty-seven, gained immediate popularity with ordinary Russians
in his new post as deputy prime minister by attacking monopolies
and bureaucratic corruption; in April Nemtsov supplanted Aleksandr
Lebed' as Russia's most trusted politician in two nationwide polls,
although most experts called his reform program virtually impossible.
Experts in Russia already were speaking of Nemtsov as the likely
presidential candidate of the "young reformers" in 2000. In April
forty-three-year-old Sergey Yastrzhembskiy, who had gained wide
approval as Yeltsin's press secretary, was named deputy chief
of staff and foreign policy coordinator while retaining his previous
position.
The struggle for power continued at the echelon of government
immediately below Yeltsin. The resignation of Chernomyrdin protégé
Petr Rodionov from his post as Minister of Fuel and Energy deprived
the prime minister of his most important Government ally. However,
Chernomyrdin's position still gave him substantial power vis-à-vis
Chubays, an important factor in Yeltsin's ongoing policy of checking
the ambitions of his most powerful subordinates. (Experts also
considered the presence of Nemtsov and Valentin Yumashev, whom
Yeltsin made his chief of staff in March, as additional factors
preventing Chubays and his powerful business allies from dominating
the reform agenda.)
Human rights continued to have strong political ramifications
in mid-1997 when both houses of the Federal Assembly passed a
law restricting the activities of all but four "traditional" religions.
The Russian Orthodox Church received special status; no other
Christian religions were included in the "traditional" category.
The law, successor to legislation introduced unsuccessfully by
nationalist and communist factions earlier in the 1990s, attracted
strong condemnation from the Vatican and human rights groups and
strong support from the Russian Orthodox hierarchy and the Communist
Party of Russia. In July Yeltsin vetoed the law--which experts
saw as evidence of growing anti-Western sentiment in Russian society--as
a violation of the constitution's human rights guarantees. The
fate of that law, and the unresolved disputes between the executive
and legislative branches over budget cuts, privatization, military
reform, and tax collection were signs that Yeltsin's new government
team still faced complex problems in their reform campaign.
August 20, 1997
Glenn E. Curtis
Data as of July 1996
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