Why Putin Remains Wary of America

Henry Srebrnik, [Charlottetown, PEI] Guardian
 
The Indian essayist and novelist Pankaj Mishra, in his new book, Age of Anger: A History of the Present, describes how “an army of Americanizers invaded Russia” following the collapse of the Soviet Union. 

These free-market theorists, convinced that laissez faire economics had won the cold war, proceeded to convince Russia’s new ruler, the buffoonish Boris Yeltsin, to administer economic shock therapy to a country still in a political shambles. It was, to use a Russian term, a new “time of troubles.”

Much blame for this calamity has been laid on by Jeffrey Sachs, the Columbia University economics professor and an exponent of “transition economics” in Eastern Europe and Russia, but there’s plenty of blame to go around. Russians, just emerging from 75 years of Communism, were now to become guinea pigs, victims of American hubris.

The transfer of wealth from the Russian state to individuals began when President Yeltsin kick-started Russia’s privatization era in 1992.

With a small army of American advisers, he began selling off Soviet era assets. Vouchers worth 10,000 roubles each were given to 144 million citizens, entitling them to a share in Russia’s major enterprises.

But most cash-strapped workers, not seeing much value in them anyway, sold their vouchers immediately for cash. Privatization of assets went to a handful of well-connected politicians and bureaucrats who came to control the economy as a whole.

They had amassed a huge number of shares by 1995, and hence, the post-Soviet oligarchy was born. The work of 70 years of Soviet labor went to the pockets of two or three dozen people.

According to one estimate, approximately $200 billion worth of state property was transferred to private hands for a total of $7 billion.

Not surprisingly, post-Communist Russia degenerated into gangster capitalism and political despotism. Oligarchic clans filled the vacuum with private armies, political machines and newspapers.

Over the course of the 1990s, living standards collapsed. Russia’s GDP fell by 50 per cent, fully 30 per cent of the population fell into poverty, the mortality rate increased by 50 per cent, life expectancy for men was cut by six years, and the crime rate skyrocketed.

“Shock therapy” punished ordinary Russians as prices soared, factories stalled and the welfare state disintegrated.

These disasters culminated in the destruction of the rouble, which lost 70 per cent of its value in August 1998.

It was a depression worse than the one suffered in western countries in the 1930s. Less than a year before, Anatoly Chubais, the Russian politician and businessman who was responsible for privatization in Russia as an influential member of Boris Yeltsin's administration in the early 1990s, was being praised by the Economist magazine for his “dynamism, guile and vision.”

Though today reviled for organizing the fire sale of his country to oligarchs, Chubais landed on his feet: he is now a venture capitalist, a member of the Advisory Council for the JPMorgan Chase Bank and a member of the global board of advisers at the Council on Foreign Relations.

By the time the 1996 presidential election came around, Yeltsin’s popularity had plummeted, and he was in danger of being defeated by the resurgent Communists.

But a team of American political strategists came to Russia to turn his electoral prospects around (no doubt with the blessing of Bill Clinton’s White House).

The group worked in hiding on the 11th floor of the Kremlin's lavish President Hotel in downtown Moscow, laying out an American-style campaign to counter the public sentiment running against Yeltsin. He prevailed – though there were claims that the election was fraudulent.

Clinton funneled massive amounts in American “aid” to Yeltsin’s kleptocracy, most of which wound up in the oligarchs’ foreign bank accounts.

Though Yeltsin narrowly avoided losing in 1996, by 1999 he was so hated and ill that he agreed to step down – on condition he be granted immunity from prosecution for the corruption through which he, his family, and various cronies, had amassed great wealth.

We know what happened after that. The chaos and mass suffering under Yeltsin helped to turn a dour former KGB operative, Vladimir Putin, into Russia’s unlikely saviour.

Putin has driven most of the oligarchs out of power and into exile, and re-established a strong authoritarian state; for that reason, many Russians consider him a “good tsar.”

A somewhat less crass and triumphalist approach on the part of western powers would have saved the humiliation that paved the way for Putin.