Capitalism: The great disaster that struck Russia in the 1990s
The introduction of capitalism in Russia was the greatest disaster to hit any country in peacetime. The suffering caused to the people of the former Soviet Union was deliberately inflicted by the West
The 1990s was the decade of bandits and thieves (oligarchs) in Russia, when people with influence plundered public assets and became dollar billionaires overnight. For the former Soviet citizen, the decade was a disaster, where the social safety net disappeared and criminals ran rampant. The mental turnaround was dramatic, Soviet values became worthless, raw capitalism prevailed, something most people were totally unprepared for.
The new Russia became a laboratory for neoliberal experiments, supported by the USA, the West and international financial institutions. An unregulated capitalism was introduced, without any counter-forces whatsoever. Capitalism was introduced from above and supported by Western countries, especially the US. Western neoliberal economists acted as advisors and recommended a rapid transition to free market conditions. The neoliberal shock therapy under Yeltsin deprived the Russians of what they had of a decent standard of living.
“A human crisis of monumental proportions”
The Soviet Union was ranked as a highly developed country. On the World Social Development Index, the Soviet Union ranked 25th, while the USA was ranked 18th. Ten years after Yeltsin's capitalist counter-revolution, Russia was ranked 60th. When market forces were unleashed in 1991, prices increased 25-fold within a few months, making people's savings virtually worthless.
During the 1990s, Russia's GDP was reduced by 50%, a historic record for any country in peacetime. Real wages for most people fell by 60%. Stephen F. Cohen, then a professor of Russian studies at New York University, wrote in The Nation in September 1998: “So great is the economic and social disaster in Russia that we must now speak of another unprecedented development, literally the de-modernization of a twentieth-century country.”
In 1999, the United Nations Development Program reported that “a human crisis of monumental proportions is emerging in the former Soviet Union.” During the decade, the average male life expectancy fell to 57 years, the same as at the end of the 19th century. Malnutrition became the norm for schoolchildren, millions of Russians went hungry. Diseases that had previously been eradicated began to spread again with epidemic speed.
For the people of the former Soviet Union, the period from 1991 to 2000 was a worse disaster than World War II. The enormous devastation of World War II lasted only about three years and affected only the western parts of the country. The devastation of capitalism encompassed the whole of vast Russia and lasted for a decade.
The US strategy was to drive Russia into the ditch
In the article “How the Neocons Chose Hegemony Over Peace Beginning in the Early 1990s”, Jeffrey D. Sachs writes about his experiences as an advisor to the Russian government from 1991 to 1993. He explains that he quickly saw the dramatic social consequences of the system change:
“I recommended that Russia reiterate the call for large-scale Western financial assistance, including an immediate standstill on debt servicing, longer-term debt relief, a currency stabilization fund for the ruble (as for the Zloty in Poland), large-scale grants of dollars and European currencies to support urgently needed food and medical imports and other essential commodity flows, and immediate financing by the IMF, World Bank, and other institutions to protect Russia’s social services (healthcare, education, and others).”
In November 1991, Yeltsin's economic advisor Yegor Gaidar met with the G7 Deputies (deputy finance ministers of the G7 countries) and requested a halt to debt servicing. The request was flatly rejected. Gaidar was told that if Russia did not continue to service every dollar as it fell due, food aid on the high seas bound for Russia would be immediately turned around and sent back.
Sachs continues: “Indeed, during 1991-94 I would advocate non-stop but without success for large-scale Western support for Russia’s crisis-ridden economy, and support for the other 14 newly independent states of the former Soviet Union. I made these appeals in countless speeches, meetings, conferences, op-eds, and academic articles. Mine was a lonely voice in the US in calling for such support.”
He continued to fight for large-scale Western funding, which he believed was becoming increasingly necessary. “I pinned my hopes on the newly elected Presidency of Bill Clinton. These hopes too were quickly dashed. Clinton’s key advisor on Russia, Johns Hopkins Professor Michael Mandelbaum, told me privately in November 1992 that the incoming Clinton team had rejected the concept of large-scale assistance for Russia.”
Yanks to the rescue
The American media can openly boast about how the US intervenes in elections in other countries to ensure the outcome it wants. In June 1996, Time Magazine ran this story on its cover: “Yanks to the Rescue. The secret story of how American adivers helped Yeltsin win”.
In the 1995 parliamentary elections, the Communist Party became the largest party, with 22% support. Together with supporting parties, they had a majority in the Duma. The largest party supporting incumbent President Yeltsin (“Our Home - Russia”) received only 5% of the vote. Voters felt the consequences of Yeltsin's policies and wanted to get rid of him.
A new presidential election was due to take place in June 1996. In February, opinion polls showed that only 6% would vote for Yeltsin, while 20% would vote for the communist Zyuganov, who had the greatest support. Four other candidates were also ahead of Yeltsin in the polls.
The situation meant that the largest oligarchs, who had enriched themselves as a result of the large-scale sale of public assets, joined Yeltsin's ranks and provided massive funding, in violation of the election law. Most important of all was the support from the International Monetary Fund (IMF), following an American initiative. The money from the IMF meant that millions of Russians were paid and repaid salaries that had been withheld.
Zyuganov was not allowed on any TV broadcasts. All TV channels were either controlled by Yeltsin or by oligarchs who supported Yeltsin. In the weeks before the election, they broadcast documentaries about the repression under Stalin, claiming that Zyuganov would reintroduce Gulag society.
In the first round, Yeltsin received 33% and Zyuganov 30%. In the second round, Yeltsin received 54% against Zyuganov's 41%. Several “irregularities” were reported. In Chechnya, Yeltsin received more votes than there were voters, and this was in a republic where Yeltsin had bombed the capital Grozny in 1994.
The result was that Yeltsin was able to continue the economic policy dictated by the USA and the West. When Yeltsin resigned on New Year's Eve 1999, opinion polls showed that he had 2% support.
Today, it is reasonable to assume that America's neoconservative hawks deliberately let Russia go to the dogs, and inflicted enormous social suffering on the population in order to get rid of a geopolitical rival once and for all. With the collapse of the Soviet Union and Russia's dramatic decline in the 1990s, the US became the sole superpower on the world stage.
Sources:
Arne Overrein «Russlands politiske landskap – Masse og makthavere» and Dag Seierstad «Russisk kapitalisme», in Vardøger 37 2018, Terje Valen «Verdas undertrykte folk og land reiser seg mot imperiet for frihet og fred», s. 133 – 138, Jeffrey D. Sachs «How the Neocons Chose Hegemony Over Peace Beginning in the Early 1990s», jeffsachs.org 04.09.24, Dag Seierstad «Valgt av oligarker», in Klassekampen 21.06.18, Time Magazine «Yanks to the Rescue», 15.07.96