02--Ch. 2--43-84 9/27/07 2:50 PM Page 43 2 The Collapse: 1988–91 After two years of attempts at radical economic reform Mikhail Gorbachev concluded that little could change in the Soviet Union without profound political reform. He wanted to move toward democracy, but he was al- ways ambiguous whether he wanted a full-fledged democracy as we un- derstand it in the West. His purpose was to undermine the orthodox party apparatus, but he was unclear about whether to transform or demolish the party. Naturally, if he had said openly what he intended to do, he would have been ousted in short order, but what is not said is not clear. For two and a half years, Gorbachev had been the most radical among the Soviet leaders. In November 1987, however, he was outflanked by one of his appointees, Boris Yeltsin. By ousting Yeltsin, Gorbachev made him the popular alternative to himself, and a long duel between them ensued. Eventually, Yeltsin won because he was a true revolutionary who radical- ized at pace with public opinion and he was prepared to face the judgment of the voters. His ultimate victory was to be elected president of Russia in June 1991. The period between 1988 and 1991 was extremely intense. The stage was set by the divide between three top leaders, Gorbachev, Yeltsin, and Yegor Ligachev. Gorbachev’s dominant endeavor was democratization, but he faced one unexpected event after the other. National revivals surged and disputes erupted. When central planning evaporated, massive rent seek- ing evolved. The reformers composed a foray of reform plans in 1989–90, but in the end no plan was adopted. In 1989, the outer Soviet empire in Eastern Europe collapsed with Gorbachev’s consent. In parallel, a multi- faceted and profound economic collapse took place. Hapless, Gorbachev was left on a political middle ground that was rapidly disappearing, while Yeltsin rose as the master of the democratic revolution. In late 1991, 43 Peterson Institute for International Economics | www.petersoninstitute.org 02--Ch. 2--43-84 9/27/07 2:50 PM Page 44 the Soviet Union collapsed, an implosion that was overdetermined by multiple causes. Elite Division: Yeltsin, Ligachev, and Gorbachev Part Company Gorbachev appointed Yeltsin the first party secretary of Moscow in De- cember 1985.1 Yeltsin had spent a brief spell as Central Committee secre- tary and before that had been first party secretary of the Sverdlovsk re- gion in the Urals for nine years. The Moscow party leadership was a big job, usually lending its holder a full membership in the Politburo, al- though Yeltsin to his chagrin was only a candidate (or alternate) Politburo member. Living in Moscow at the time, we could feel a fresh wind after Yeltsin had come in. He broke with the privileges of the nomenklatura, the Soviet ruling class, taking the metro and visiting ordinary shops. Soon, com- plaints arose that Yeltsin had sacked so many city officials for sloppy work and corruption that the city’s reserve of personnel was exhausted. Some- what amateurishly, he set up booths in the streets to supply goods to the population, but they worked poorly because price controls and the old centralized supply system persisted. Yeltsin became very popular among Muscovites for his vibrant activity and ruthlessness against the old appa- ratchiks, but it was unclear whether he was a populist or a democrat. When Gorbachev was on holiday in the summer of 1987, Ligachev chaired the Politburo and clashed with Yeltsin. After a skirmish over nomenklatura privileges, Yeltsin wrote to Gorbachev, submitting his resig- nation as first party secretary of Moscow and as a candidate member of the Politburo. His letter contained no specific political reason, only cryptic complaints about Ligachev’s “unsystematic and crude” work (Yeltsin 1990, 4–7). It gives the impression of a severe collision between two strong- headed and ambitious leaders. Yeltsin later protested that Ligachev was dogmatic and authoritarian. Gorbachev tried to ignore this conflict, but at the Central Committee plenum in October 1987, Yeltsin violated party protocol by ex promptu asking for the floor. This time his speech was political. He complained that “nothing has changed in the style of work of either the secretariat of the central committee or of Comrade Ligachev.” He objected to coercion by party bosses, advocating democracy within the Communist Party, in- cluding in its highest organs. Yeltsin also criticized undue flattery of Gor- bachev. He complained that perestroika had slowed down and that “peo- ple’s faith began somehow to ebb.” Yet, he appealed for the restoration 1. Overall sources for this section and the next are Aron (2000), Brown (1996), Ligachev (1993), and Yeltsin (1990). 44 RUSSIA’S CAPITALIST REVOLUTION Peterson Institute for International Economics | www.petersoninstitute.org 02--Ch. 2--43-84 9/27/07 2:50 PM Page 45 of Leninist principles and did not abandon communism (Yeltsin 1990, 144–47). Yeltsin sensed the radicalization of the public mood, which soon mounted to a revolutionary wave, and he realized that the reforms were insufficient. Gorbachev, obviously surprised, summarized Yeltsin’s critique and in- vited other members of the Central Committee to comment. One after the other, the old party hacks savaged Yeltsin in lockstep in an old-style com- munist onslaught. Even liberal Aleksandr Yakovlev and mild Prime Min- ister Nikolai Ryzhkov joined the attack. Gorbachev ordered a vote and the Central Committee unanimously condemned Yeltsin’s speech as “politi- cally erroneous.” A couple of weeks later, he was hospitalized with severe chest pain. While Yeltsin was in the hospital, Gorbachev ordered him to come to the Moscow party committee on November 11, 1987. Pumped with tranquilizers, Yeltsin was forced to run a political gauntlet led by Gorbachev. All the speakers scolded Yeltsin for unimaginable mischief. Yeltsin was shocked and devastated by their virulence. He confessed his guilt in the old party fashion, and the party committee sacked him in great unity (Aron 2000). In this ugly moment, Gorbachev succumbed to typical old Stalinist per- secution. But, to quote Talleyrand, it was worse than a crime, it was a blunder. This was the political turning point for perestroika, marking the split of the liberals from Gorbachev. For the first time, Gorbachev had been outflanked by a top liberal and he would never retrieve his position as a leading radical. Yeltsin, with his strong political instinct, would con- tinue to ride the wave of radicalization. After this party meeting, however, Gorbachev returned to his usual mild manner. He phoned Yeltsin himself and offered him a position as a junior minister of construction, which Yeltsin accepted, disappearing from the public stage for some time. Two years later, Yeltsin (1990, 2) com- mented magnanimously: In Stalin’s time ex-politicians were shot; Khrushchev pensioned them off; in Brezhnev’s ‘era of stagnation’ they were packed off as ambassadors to distant countries. Here, too, Gorbachev’s perestroika has set a new precedent: a dismissed politician is given the chance of returning to political life. On March 13, 1988, the hard-line communist newspaper Sovetskaya Rossiya published a full-page article by Nina Andreeva, an unknown lec- turer in chemistry in Leningrad. Tellingly, the title was “I Cannot Forsake My Principles.” Sovetskaya Rossiya was an authoritative party newspaper, and this article was obviously approved by the Politburo. Cleverly, Lig- achev had let this article be published when both Gorbachev and Yakovlev were going abroad, although he denied that was the case. The liberal in- telligentsia was stunned because this was a Stalinist manifesto, repudiat- ing in detail every element of glasnost and perestroika, presenting them as treason against good communism. Was perestroika dead? THE COLLAPSE: 1988–91 45 Peterson Institute for International Economics | www.petersoninstitute.org 02--Ch. 2--43-84 9/27/07 2:50 PM Page 46 Three weeks later came the relief. Pravda, the foremost party organ, published an equally large article that repudiated the Andreeva article. Yakovlev was the main author, but it was published without signature, which implied full party authorization. The Nina Andreeva affair was only a hiccup, but it showed how tenuous perestroika, glasnost, and Gor- bachev’s hold on power were. Glasnost was no longer the privilege of the liberals. They had to contend with vocal hardliners as well. The result of this affair was that its instigators, notably Ligachev, were demoted (Lig- achev 1993, 298–311; Brown 1996). At the turn of 1987, the Gorbachev group in the party leadership had fractured. Yeltsin was about to emerge as the leader of the democrats, whereas Ligachev had become the leader of the hardliners. Yakovlev and Shevardnadze stayed with Gorbachev, but Gorbachev had became a man of the political center that was going to shrink fast, although not quite yet. Democratization As early as December 1984, Gorbachev pronounced his desire for “de- mocratization” (demokratizatsiya), but, as with everything else he said, it remained a guessing game for years what this oracle meant. To begin with, Gorbachev seems to have desired little but “to breathe new life into existing institutions and to remove the formalism of intra-party life and in the activity of the soviets,” as Brown (1996, 155) saw it, which was hardly “democratization” but political liberalization. Over time, Gorbachev grew more radical, as he realized how difficult it was to revitalize Soviet society and economy. In January 1987, the Central Committee held a plenum, which became the starting point for Russia’s democratization, and Gorbachev’s speech was a radical departure: “Pere- stroika itself is possible only through democracy and thanks to democ- racy.