The End of Soviet Rule and the Emergence

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The End of Soviet Rule and the Emergence of Post-Communist Russia Mikhail Gorbachev Communist The End of Soviet Rule and the Emergence of Post-Communist Russia Mikhail Gorbachev Communist true believer Last General Secretary of the Communist Party of the Soviet Union What motivated Gorbachev to initiate reform of the communist system? Mikhail Gorbachev

The End of Soviet Rule and the Emergence of Post-Communist Russia What motivated Gorbachev The End of Soviet Rule and the Emergence of Post-Communist Russia What motivated Gorbachev to initiate reform of the communist system? n weak incentives n lack of efficiency n lack of innovation n (graph)

The End of Soviet Rule and the Emergence of Post-Communist Russia Key elements in The End of Soviet Rule and the Emergence of Post-Communist Russia Key elements in Gorbachev’s reform program n Economic restructuring (Perestroika) n Political openness (Glasnost ) n Limited democracy (Demokratizatsiia) ultimately led to collapse of Soviet Union

The End of Soviet Rule and the Emergence of Post-Communist Russia Gorbachev’s reforms n The End of Soviet Rule and the Emergence of Post-Communist Russia Gorbachev’s reforms n Provoked attempted coup ¨ By party apparatchik (hacks) (August 1991) Gennady Yanayev

The End of Soviet Rule and the Emergence of Post-Communist Russia n Radical reformers The End of Soviet Rule and the Emergence of Post-Communist Russia n Radical reformers inside the Communist Party resisted the coup ¨ Boris Yeltsin n n Party official President of the rubberstamp legislature of Russian part of Soviet hierarchy Boris Yeltsin

The End of Soviet Rule and the Emergence of Post-Communist Russia n n n The End of Soviet Rule and the Emergence of Post-Communist Russia n n n Yeltsin declares independence of Russian Republic (December 1991) Republics withdrawal from Soviet Union Gorbachev resigns Boris Yeltsin

Introducing post-Soviet Russia n New Russia (Russian Federation) ¨ Elections, but n “Not Free” Introducing post-Soviet Russia n New Russia (Russian Federation) ¨ Elections, but n “Not Free” (Freedom House) ¨ HDI rank— 65 th n 2004 GDP < 1989 GDP Now, Putin’s Russia

Post-Soviet Russia: Neo-liberal reforms n Yeltsin as a radical reformer ¨ Influence of neo-liberal Post-Soviet Russia: Neo-liberal reforms n Yeltsin as a radical reformer ¨ Influence of neo-liberal theory, US economists, International Monetary Fund ¨ 1992: “shock therapy”/ “big bang” ¨ Destroy the state planning/regulatory apparatus

Post-Soviet Russia: Neo-liberal reforms n “Shock therapy” 1992 ¨ Dismantle planned economy n End Post-Soviet Russia: Neo-liberal reforms n “Shock therapy” 1992 ¨ Dismantle planned economy n End state-set prices on January 2, 1992

Post-Soviet Russia: Neo-liberal reforms Year 1990 1991 1992 1993 1994 1995 Real GDP -2. Post-Soviet Russia: Neo-liberal reforms Year 1990 1991 1992 1993 1994 1995 Real GDP -2. 1 -12. 9 -18. 5 -12. 0 -15. 0 -4. 0 Industrial Output -0. 1 -8. 0 -18. 9 -16. 2 -20. 9 -3. 0 Agricultural Output -3. 5 -4. 5 -9. 0 -4. 0 -9. 0 -8. 0 5 93 880 320 Consumer Price Inflation → 1, 354

Post-Soviet Russia: Neo-liberal reforms n “Shock therapy” 1992 ¨ Dismantle planned economy Privatize state-owned Post-Soviet Russia: Neo-liberal reforms n “Shock therapy” 1992 ¨ Dismantle planned economy Privatize state-owned industry n Initial privatization of state-owned enterprises under Yeltsin n vouchers to citizens (w/ little information) “nomenklatura privatization” future oligarchs also buy up vouchers

Post-Soviet Russia: Neo-liberal reforms Year 1990 1991 1992 1993 1994 1995 Real GDP -2. Post-Soviet Russia: Neo-liberal reforms Year 1990 1991 1992 1993 1994 1995 Real GDP -2. 1 -12. 9 -18. 5 -12. 0 -15. 0 -4. 0 Industrial Output -0. 1 -8. 0 -18. 9 → -16. 2 -20. 9 -3. 0 Agricultural Output -3. 5 -4. 5 -9. 0 -4. 0 -9. 0 -8. 0 5 93 1, 354 880 320 Consumer Price Inflation

Privatization n Who benefits from privatization? 1. Former factory directors 2. Nomenklatura ministers of Privatization n Who benefits from privatization? 1. Former factory directors 2. Nomenklatura ministers of gas industry turned ministry into private company Gazprom (oil and gas) 3. Upstarts (former black marketeers) turned oligarchs n 1996 “loans for shares” auctions of state assets ¨ Well-connected businessmen like Khodorkovsky got key state assets -- including major parts of the energy sector -- at bargain basement prices in exchange for financial support for Yeltsin’s government in lead up to 1996 elections.

The End of Soviet Rule and the Emergence of Post-Communist Russia n “It was The End of Soviet Rule and the Emergence of Post-Communist Russia n “It was simply too much to expect that a market system would suddenly materialize out of nothing. After all, for 70 years the state and the Communist Party had done everything they could to stamp out any remnant of market behavior…” (Marshall Goldman)

The End of Soviet Rule and the Emergence of Post-Communist Russia n Incomes decline The End of Soviet Rule and the Emergence of Post-Communist Russia n Incomes decline by 50% from 1991 -93 n Inequality explodes ¨ n n Gini coefficient 1988 = 24; 1998 = 45 Sex (HIV/AIDS), alcohol (ism), and drugs Population declines by 5 million in a decade (1992 -2002) Highest mortality rate in Europe ¨ Lowest birth rate in Europe ¨

Putin’s Russia: creeping authoritarianism n Bureaucrats take charge of the economy ¨ Attacking oligarchs Putin’s Russia: creeping authoritarianism n Bureaucrats take charge of the economy ¨ Attacking oligarchs who had amassed incredible wealth and power ¨ Asserting control over n Energy sector ¨ Ex: Yukos—Russia’s largest oil company § Headed by Khodokovsky (oligarch) arrested § State took over his shares in company

Putin’s Russia: creeping authoritarianism n Bureaucrats in charge of the economy ¨ Attacking oligarchs Putin’s Russia: creeping authoritarianism n Bureaucrats in charge of the economy ¨ Attacking oligarchs who had amassed incredible wealth and power ¨ Asserting control over n Media sector 2000 Gusinsky Media Most—arrested on fraud, embezzlement ¨ 2003 Press Ministry closed independent tv station (TVS) for “financial crisis” ¨ Example: state authorities can shut down news organizations for campaign coverage deemed to be biased ¨

Murders of journalists Anna Politkovskaya Murders of journalists Anna Politkovskaya

Journalist Politkovskaya’s Anti-Putin Book Published in UK October 15, 2004 Moscow News A book Journalist Politkovskaya’s Anti-Putin Book Published in UK October 15, 2004 Moscow News A book by the famous Russian journalist Anna Politkovskaya, entitled Putin’s Russia, was published in the United Kingdom on Thursday. The book describes the Russian president, Vladimir Putin, in a devastating light, The Independent newspaper wrote on Friday. It has not been published in Russia. The journalist, who works at Novaya Gazeta, calls him “a KGB snoop” and warns that he is moving the country back to a Soviet-style dictatorship, the paper wrote. Politkovskaya compares Putin to Joseph Stalin, to an over-promoted spy and to a miserable humiliated functionary from a Nikolai Gogol story. “Under President Putin we won’t be able to forge democracy in Russia and will only turn back to the past.

Reporter's Murder Leads to Wide Speculation October 9, 2006 “JOURNALIST, GOVERNMENT CRITIC MURDERED: The Reporter's Murder Leads to Wide Speculation October 9, 2006 “JOURNALIST, GOVERNMENT CRITIC MURDERED: The murder of Anna Politkovskaya, possibly the strongest journalistic voice in opposition to the government of President Vladimir V. Putin and Russia's war in Chechnya led all the major newspapers today. Ms. Politkovskaya, a contributor to the independent Novaya Gazeta newspaper, was shot three or four times in the stairwell of her apartment in Moscow on Saturday afternoon. “One of Ms. Politkovskaya's colleagues at Novaya Gazeta [said] that anyone could have been behind the murder: members of Russia's intelligence services, Chechens associated with Mr. Kadyrov, the police, or pseudo-patriots and fascists.

Russia’s Evolving Political System n The Impact of the Economy on Political Attitudes ¨ Russia’s Evolving Political System n The Impact of the Economy on Political Attitudes ¨ See also O’Neil, Cases, p. 274 and 277.

World Values Survey Russian Federation, 1999 A 165. - Generally speaking, would you say World Values Survey Russian Federation, 1999 A 165. - Generally speaking, would you say that most people can be trusted or that you need to be very careful in dealing with people? 1 Most people can be trusted 2 Can´t be too careful

World Values Survey Russian Federation, 1999 A 170. - All things considered, how satisfied World Values Survey Russian Federation, 1999 A 170. - All things considered, how satisfied are you with your life as a whole these days? 1 Dissatisfied 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 Satisfied

World Values Survey Russian Federation, 1999 E 119. - If you had to choose, World Values Survey Russian Federation, 1999 E 119. - If you had to choose, which would you say is the most important responsibility of government? A. To maintain order in society, or B. to respect freedom of the individual.

Russia’s Political Institutions New constitution adopted 1993 n Strong president n ¨ Directly elected Russia’s Political Institutions New constitution adopted 1993 n Strong president n ¨ Directly elected by popular vote ¨ Strong executive powers n Prime minister ¨ Appointed by the president n Bicameral legislature

Russia’s Political Institutions Electoral System for Duma (lower house of parliament) through 2003 elections Russia’s Political Institutions Electoral System for Duma (lower house of parliament) through 2003 elections n Duma elections (450 seats) n ¨ 225 seats: single member districts by first-past -the post/winner-take-all ballot ¨ 225 seats: nationwide by proportional representation (party-list) ballot

1995 Duma Elections—Major Parties Party Leader Communist Party Zyuganov % PR SMD Total PR 1995 Duma Elections—Major Parties Party Leader Communist Party Zyuganov % PR SMD Total PR Seats Vote 22. 3 99 58 157 “Russia is Our Home” Chernomyrdin 10. 1 45 10 55 Liberal. Democratic Party (neofacist) Yabloko (reformist) Zhirinovsky 11. 2 50 1 51 Yavlinksy 6. 9 31 14 45

2003 Duma Elections—Major Parties Party United Russia Communist Party Liberal. Democratic Party (neo-facist) Motherland 2003 Duma Elections—Major Parties Party United Russia Communist Party Liberal. Democratic Party (neo-facist) Motherland Yabloko (reformist) Independent and Others % PR Vote 37. 57 12. 61 11. 45 PR Seats 120 40 36 SMD Seats 102 12 0 Total Seats % 49. 3 11. 6 8. 0 9. 02 4. 3 29 0 8 4 8. 2 0. 9 0 0 99 22. 0

Electoral System Changes n n In September 2004, President Putin proposed the abolition of Electoral System Changes n n In September 2004, President Putin proposed the abolition of the two ballot system, so that all candidates would be elected on party lists through proportional representation. The 225 single-member districts were abolished. In 2003 100 of these seats were won by independents or minor party candidates. ¨ Ex: Yabloko n n 2005 put into law 2007 in effect for 2007 Duma election

2007 Duma Elections—Major Parties 2007 Duma Elections—Major Parties

Presidential Elections in Russia’s “Strong President” System n Yeltsin ¨ 1991: first elected under Presidential Elections in Russia’s “Strong President” System n Yeltsin ¨ 1991: first elected under Soviet election law n Won 57% of the vote ¨ 1996: elected in run-off against Communist Party candidate Zyuganov n Won 35. 2% of the vote in the first round ¨ 1999: resigned early to appoint Putin

Presidential Elections in Russia’s “Strong President” System n Putin ¨ 2000: elected with 52. Presidential Elections in Russia’s “Strong President” System n Putin ¨ 2000: elected with 52. 5% of the vote platform: Strong military actions against Chechen “terrorists” n Anti-corruption n New nationalism—regain Russia’s international stature n ¨ 2004: elected with 71. 3% of the vote n n NY Times: January 9, 2004 Medvedev ¨ 2008: elected w/ Putin as PM platform

Russia's presidency “The pseudoelection” n n n THE Russian presidential election on March 2 Russia's presidency “The pseudoelection” n n n THE Russian presidential election on March 2 nd was never going to be a thriller. Its outcome was clear from the moment Vladimir Putin announced his chosen successor: Dmitry Medvedev. Perhaps decorum might still have been observed by letting one [viable] opposition candidate stand. But the Kremlin has no time for niceties; it has refused to register Mikhail Kasyanov, once Mr Putin's prime minister, and has also kept out most foreign election observers. The only two serious candidates besides Mr Medvedev will now be an extreme nationalist, Vladimir Zhirinovsky, and Gennady Zyuganov, perennial leader of the Communist Party.

2004 Presidential Election Putin, Vladimir NUMBER OF VOTES PERCENTAGE 49, 565, 238 71. 31 2004 Presidential Election Putin, Vladimir NUMBER OF VOTES PERCENTAGE 49, 565, 238 71. 31 Kharitonov, Nikolai 9, 513, 313 13. 69 Glazev, Sergei 2, 850, 063 4. 10 Khakamada, Irina 2, 671, 313 3. 84 Malyshkin, Oleg 1, 405, 315 2. 02 Mironov, Sergei 524, 324 0. 75 2, 396, 219 3. 45 Against all candidates

Putin’s Russia 1998 economic crisis (Yeltsin legacy) n Since 1998, economy buoyed by n Putin’s Russia 1998 economic crisis (Yeltsin legacy) n Since 1998, economy buoyed by n ¨ Oil prices From $11/barrel to $30/barrel n By 2007 -08 $90 -100/barrel n Note vulnerabilities, however n

Putin’s Russia 1998 economic crisis (Yeltsin legacy) n Since 1998, economy buoyed by n Putin’s Russia 1998 economic crisis (Yeltsin legacy) n Since 1998, economy buoyed by n ¨ Devaluation of ruble n Makes imports more expensive ¨ Opportunity for local manufacturers From 6 rubles to the dollar To 24 rubles to the dollar n ¨ Imports dropped ~50%




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