6 MAY 1992 THE INDEPENDENT MONTHLY

THE FIRST thing that strikes you about the new Russia are the beggars and the street peddlers, thousands of them lined up shoulder-to-shoulder selling off small items of value-a pair of earrings, a carton of milk, some tools and spare-parts that almost certainly have been pilfered from somewhere.

Then there is the squalor. Moscow never was a prima donna city. But today it looks like Leningrad after the Nazi siege of 1941/42. Lack of maintenance is endemic. Parts of central Moscow look as if they have been bombed, with whole blocks decaying and abandoned. Road and pipe repairs consist mainly of large craters surrounded by minimal activity. Broken-down, cannibalised cars litter the streets. The place seems to be falling apart.

True, not everything is in decline. Coming back for the first time since the Khrushchev era I am delighted by the absence of the KGB spooks and thugs. Once they used to follow you in squads-three to four cars in rotation, with up to three operatives in each car. At the entrance to the Australian embassy the militia still stand guard. But their main job now is to control the crowds trying to get visas for Australia, rather than track your movements in the hope of staging an operation against you later. One is impressed, too, by the liveliness and intelligence of the print media, the zeal of the Hyde Park-like orators, the openness to Western ideas, and the occasional efficient, free-enterprise restaurants standing out like islands in a sea of slovenliness and inefficiency.

But freedom has not brought much joy to the faces of the crowds. The new rich may be out there somewhere but it is the new poor that you see-the pinched faces of the elderly, the Dantean squalor that surrounds the main railway stations. In many of the larger shops almost the only goods worth buying are priced in US dollars or are part of the food-lift from west Europe, advertised ostentatiously as EC generosity when in fact it comes from subsidised surpluses that cannot be sold elsewhere. One sure sign of a stalled economy is the absence of new building. Another is a lack of truck transport. Trucks exist. But few are carrying anything of importance.

Comparisons are made with Poland. It, too, fell back in the first years of economic liberalisation. But now it is supposed to be getting over the trauma. Russia will travel the same route, it is claimed. The chaos and poverty we see now are supposed to be only temporary. But Poland had a lot going for it that Russia doesn’t have. It had a bourgeoisie. It had reasonably good foreign contacts, thanks to the large number of Poles abroad. Most of all, it had a free-enterprise agricultural economy ready to swing into action once state controls were lifted.

Even so, it is still doubtful whether the Polish experiment will succeed. German trade with East Europe-a good barometer of what is actually happening in the area-is falling, rather than rising as everyone had predicted. If the West Germans say it is going to take 10 years to rehabilitate the East German economy, how can anyone be optimistic about the rest of east Europe. And if east Europe is in trouble, how much worse is the trouble going to be in the territories of the former Soviet Union?

Take agriculture, which most agree is the key to any Russian recovery. Right now the Russian government should be pushing through privatisation reforms before the spring sowings. In fact, almost nothing has been done. Collectivised land remains under the bosses inherited from the past; agro-gulags is how one critic describes them. As another wit puts it, before Russia can give land to the peasants it must first create a peasantry. Years of mismanagement have literally run the farms into the ground.

In industry, the situation is not much better. The central control of the past was inefficient. But at least there was control. Today industry is in limbo. Small glitches can magnify into major catastrophes. Because a factory in what is now Belarus cannot get feedstock for its rubber plant, there is a shortage of truck tyres, which slows down the transport network, which is one of the reasons that tyre factory cannot get its feedstock. A recent Japanese mission to the important West Siberian oilfields found that in addition to the problems of political chaos and oil-well exhaustion, one out of five wells was not operating because of lack of spare parts. One reason factories don’t make enough of the needed spare parts is the lack of oil. Until recently, badly-needed goods could be imported. But economic chaos and the slowdown of oil and other exports make it harder to get foreign exchange or foreign credits. So less is bought, the chaos and slowdowns worsen, exports are cut further, imports fall further. Taken together it is a formula for economic implosion.

True, factories can improvise and improvisation could ideally be the mother of future progress. In Baku they tell the story of a factory which, when cut off from its regular supply of ball-bearings 5,000km away in Estonia, suddenly discovered there was a ball-bearing factory in Baku. Shortages led a few daring entrepreneurs (one of them the daughter of a Japanese communist who settled in Moscow to escape Japanese capitalism) to set up a Moscow commodities exchange and this is helping free up the movement of goods. But much of the widely welcomed private-enterprise boom is small business or glorified speculation, both preyed on by gangsters and a rapidly corrupting police force.

Hyper-inflation will provide the coup-de-grace. I arrived in Moscow to hear the good news that the rouble had firmed against the dollar. The reason? The printing presses cannot produce roubles fast enough to meet inflationary demand. So too many US dollars were chasing too few rouble notes, hence the currency appreciation. Yeltsin’s attempt to use the appreciation early in April as proof his policies were working met open guffaws from the Congress of People’s Deputies (the Russian parliament). The same assembly has now forced him to soft-pedal his liberalisation reforms.

What comes next? Don’t rule out entirely the chances of a conservative, pro-communist comeback. The Russians were never a wildly progressive people; even when they were supposed to be implementing communist ideals they managed to keep their women suppressed, their schools rigidly conformist and their hierarchies intact. Some must be angry over loss of empire and the growing dependence on Western aid. At the very least there must be some people upset by the sight of things like the stick, UK-operated casino with its US-dollar-only betting rings in Moscow’s seedy Intourist hotel (“no Russians or dogs” the bouncers seem to be thinking 4sthey check your credentials at the door) only metres away from beggars scratching for worthless roubles near the once-proud Red Square monuments.

Read the manifesto of the communists who organised the August 1991 putsch and you are reading a document that would have appealed to a range of Australian conservatives, from B.A. Santamaria to Fred Nile and the RSL. The putsch conservatives were looking back to a time when life was predictable and ordered. They worried about the breakdown of law and order, the flood of pornography, the loss of national pride, the collapse of military morale. There must be others in Russia like them.

But if they exist, the pro-communist variety is hard to find. One taxi-driver told me that even the communists were preferable to the current chaos and poverty. But since he was happily overcharging me by 500 per cent, and had a line of nude pin-ups on his dashboard, I couldn’t take him too seriously. Listening to the impromptu kerbside debates that happily rage on for hours, I would give the communists little more than 10 per cent in a fair vote. And that is a vote of the kerbside political activists. Include the rank and file and it would be much less.

An informal poll at a reception for an eight-person Russian parliamentary delegation just returned from Australia produced one vocal back-to-communism stalwart-a former cosmonaut who presumably had enjoyed the good life in the communist past. The others just smiled at him, condescendingly. (The delegation was less than impressed by the attentions it had received from our anti-communist ASIO/ASIS stalwarts in Melbourne.)

Media people are even more negative. According to Alexander Kobakov, deputy editor of Moscow News (probably the liveliest and best of the flourishing independent newspapers), there can be no return to the past. Indeed, in 1988 he wrote a book with the same title, No Return. In it he set out to predict events through to 1993-so far correctly, he notes with rueful pride. He foresaw the collapse of communism, the economic chaos, the breakup of the USSR, the nationalities conflicts, the inflation. He also predicted the emergence of a new dictatorship. Why can’t Russia get its act together? “We were defeated in the cold war. But unlike defeated Germany in 1945 we had no army of occupation, we had no [Ludwig] Erhard (the famous postwar West German finance minister) to give us new directions. All we have is an ex-communist, Yeltsin.”

If there is to be a dictator to rescue Russia it will be brown (right-wing, semi-fascist) rather than red (communist), he suggests. He talks easily of a Pinochettype leader emerging.

As if to confirm Kobakov’s “brown” scenario, I meet through an introduction by a fluent Russian speaker at the Australian embassy in Moscow (one institution that has improved over the years) a dissident journalist who has done much to expose the corruption of the past and under Yeltsin. He is still shaking from the shock of having been pulled in by the police, abused for his Jewish origins and warned to be more careful in future writings “or else”.

Vitaly Tretyakov, editor of the Nezavisimaya (Independent) newspaper and a sometime contributor to this monthly, bristles at the suggestion that Russia can’t get an act together. He is close to the Yeltsin reformers, even if he does not endorse them entirely. “What is our government?” he asks rhetorically. “Essentially, it is a team of talented young economists doing their best to undo the damage of decades of communism.” Will Yeltsin be destabilised by the semi-conservatives in his camp, in particular the Afghanistan war “hero”, vice-president Alexander Rutskoi? “You cannot divide us into progressives and conservatives as in the UK,” Tretyakov chides. “With us relations are more fluid. Personal connections, external pressures, a wide range of factors are involved. At the moment I can assure you that relations between Rutskoi and Yeltsin are good.” As if to emphasise the point the phone rings and after five minutes of intimate, first-name conversation he returns to say that Rutskoi has just rung.

How about a return to Gorbachev, I ask. Tretyakov smiles negatively: “It may be easy for you Westerners to like Gorbachev. But for us it is different. We are rather like the man whose wife has found herself a lover. We have known the wife for a long time so we know all her faults. We know too that while she has been having a good time with her lover, the children at home have not been fed. The lover (the Western admirers of Gorbachev) has no such problem. All he sees is the good things-the destruction of the Berlin Wall etc.”

Tretyakov’s point is good. The Western infatuation with Gorbachev was also due to a mistaken belief that he was the only “wife” that could be seduced. In fact, any one of a dozen different people could have produced the same liberalisations as Gorbachev produced, perhaps with more success. Soviet communism was never the rigid, unbending thing our hawks insisted it was. We also never knew Gorbachev in the Russian context. A recent Russian TV in-depth series of interviews with Gorbachev and his wife reveals a far less attractive personality than the West sees a pedantic self-preoccupied and self-pitying pair far removed from Russian reality.

Andrei Fadin, deputy editor of the periodical XX Century And Peace, also mentions the “Pinochet solution”. But, he says, a strong leader needs a strong base and at the moment there is none, whether in the army, the police, the trade unions, the political parties or the state bureaucracy. The military, he says, is hopelessly split.

Others also raise the search for a model. In addition to Pinochet’s Chile, South Korea is mentioned often. China, with its blend of successful economic reform and fairly strict party control, is also considered, although Tretyakov, who has been to China, sniffs that Russians have little to learn from the still backward and impoverished East. (He is contradicted, though, by the numbers of ex-Soviets now travelling to China to buy up TV sets, quality clothing and food.) No-one is very interested in Japan as a model; far too remote and difficult is the verdict. Fadin makes the interesting point that while Russia, like Japan, still has feudal elements, those elements are more Latin-American than Japanese. Civilian society remains weak, and will take generations to stabilise. He sees Argentina as a close parallel: “Like us, it is too European to accept a long dictatorship, but too weak to provide a stable democracy.”

Russia is also too big, he says. Like many others, he assumes it is just a matter of time before the Russian Federation begins to fall apart. Already regional blocks are being formed, with the militia stopping the free movement of trucks. Legal chaos and lack of legitimacy are the main problems. “Every regional Soviet thinks it is the Supreme Soviet.” No-one I spoke to expected the Commonwealth of Independent States to survive. Antagonism to the Ukraine was open. Fadin was even happy to mention the so-far unmentionable-the concept of the ex-Soviet Far East turning towards China, Japan and Korea. “We have no goal, no dream, to work for. All we can do is try to hold ourselves together, like the bonding on a barrel.”

I got much the same depressing message from Alexander Likhotal, whose card says “PhD Adviser and Spokesman to the President of the Gorbachev Foundation”. Looking and sounding much more like a buttoned-down US political scientist than a Soviet-style academic, he seems mildly out of place in the communist-style building that serves as the foundation’s headquarters (the building used to be the Institute of Party Studies). He talks about Russia as having exhausted the “margin of stability of the democratic process”. As he sees it, “the society is almost ready to exchange bread for freedom. The corruption is now worse than it was under Brezhnev.” If there was an election today who would win, I ask, Gorbachev or Yeltsin? “Neither.”

The loss of morale is pervasive. The USSR I knew under Khrushchev was far from perfect. But there was no shortage of pride, and confidence for the future. There was also some achievement-the shops were reasonably full, the society reasonably stable, Moscow was holding up in the arms race. Where had things gone wrong? Brezhnev was the common answer, and not just the cynicism born of corruption during his long regime. As with the UK, the sudden access to oil wealth in the seventies distorted the economy. Likhotal makes the point that it also added to the centralisation of power. Brezhnev used the oil revenues to continue the arms race, and the arms race to strengthen his power (the fact that US conservatives were using the arms race to strengthen their power should stir Western conservative consciences much more than it does).

Fadin put it well: “In the sixties we had the intense feeling of life getting better all the time. There was inequality, but dynamism too. People coming into the cities suffered bad conditions but had an upward perspective. When the oil wealth began to run out in the eighties things began to deteriorate. And the second generation of urban population-my generation-would no longer accept having to work under bad conditions.”

True, with the loss of morale comes a much-needed humility. But how far can humility go? What do the military think as they see their pilfered uniforms and badges on open sale in the Moscow flea markets? From the 15th floor of the vast Institute of World Economy and International Relations, once a hotbed of KGB connections and nationalist academia, Alexei Zagorsky, PhD, 36, with his computer terminals acquired at large dollar expense, talks happily of his close ties with right-wing Japanese organisations such as Jiji Press, and the well-paid lecture tours they organise for him, in which he virtually supports Tokyo’s case against Moscow in the current Northern Territories dispute. On the door of his office remains the nameplate of his close colleague, Andrei Kozyrev, who now happens to be Russia’s very young foreign minister. Surely there is going to be a nationalist reaction, either “red” or “brown”, against these people who have allegedly sold out Russian interests to the West and Japan.

After only a brief visit, and even before the recent attacks on Yeltsin’s policies in the Russian parliament, it was clear to me that Moscow’s experiments in instant reform were in deep trouble. Russia has passed the point of no return. Complete collapse is possible. Financial aid from the West will help for a while, but it is going into a black hole. Recent economic reforms introduced under the “shock therapy” approach preached by rationalist US economists and embraced by some of Yeltsin’s advisers are not going to work. “Plenty of shock but no therapy,” as the Moscow wits put it. And as the reforms are cut back, so too is the promise of US and IMF aid.

As ever, the rationalists seem to have let theory obscure reality. The mechanism of a free economy cannot just be plucked out of the air. Change in any system has to be gradual. Even if the theories are right, they will, as we see in Australia today, be derailed simply by the sheer weight of unemployment and poverty caused by the changes.

As early as the Khrushchev years the Soviets were groping towards economic and political reforms; at one stage Khrushchev came up with the idea, progressive even in our advanced democracies, that officials could not hold a post for more than two years. But the hawks in the West decided they had a greater interest in keeping Khrushchev under political pressure, to the point where he could be ousted by the Brezhnev hawks and conservatives.

If the Khrushchev reforms could have gone ahead gradually, Russia today would be a much healthier place than it is. It may not have resembled Scandinavia, but it would at least have been a stable, non-medicant, reasonably democratic state, probably rather like Spain.

Today’s reforms are almost childish in their naivety. Encourage the workers to buy shares in the firms where they work, is the current slogan. Great idea, asking people to put up good money for a share in a firm which the current reforms will probably drive bankrupt. The whiz-kids freed butter prices but not milk prices. So now everyone wants to make butter and there is no milk for sale. In Moscow they encourage you to buy your own house. But you can’t get a title because there is no proper system of land registration.

Some see inefficiency and backwardness as built into the Russian personality. Certainly there is a feckless streak that says other things-friends, drink, philosophical debates come before hard work and progress. Equality in poverty. I like the story of Igor’s pig: the Englishman, asked by God what he wanted, asked for a house bigger than his master’s. The Frenchman said he wanted a vineyard bigger than his friend’s. The Russian complained that while he didn’t have a pig, his neighbour Igor did. “Please kill Igor’s pig.”

But Russians can be efficient. Someone had to work hard to create a space program more advanced in many areas than the expensive US program. At the Moscow subway stations the trains barrel in at around 50krn an hour, unload and load in seconds, are out in a few more seconds to be replaced by another train within little more than a minute. All this is done by a single driver, without the help of any conductors or platform attendants. With the right leadership, Russians can be productive. The problem is where to find the right leaders.

0ne story alone will explain why the Russia of today is not going to make it. It concerns a former party boss in the coal-mining district of Sverdlovsk. Like most party bosses, he indulged in the usual pretty deceitsemerald-green fences to screen miners’ ramshackle housing, a magnificent building for the regional party committee, a single model farm to show off to visitors and an asphalt road to his own constituency.

Just before Gorbachev’s perestroika reforms, the boss decided to boost his own and the district’s image with a reconstruction campaign. Large automatic mining machines were imported at great cost. But they were too big to fit into the mines. So they were cut into pieces and reassembled underground, only to find they could not operate in the narrow tunnels. Eventually they tried to change the mines to fit the machinery.

A journalist who tried to use glasnost to expose this waste was expelled from the party. Later she was told: “Never mind if a mine, factory or some other enterprise has been ruined. We have fulfilled our political objective. Reconstruction has begun all over the country. Stop grumbling.”

No doubt you think the conservative party hack responsible for this inefficiency has been driven out by the Gorbachev-Yeltsin reforms, and is now washing cabbages somewhere. Well think again. The name of that regional party boss is Boris Yeltsin.