10.09.1998

Seven years after

Does the crisis mean that Russia is on the verge of revolution?

As the Russian financial and political crisis deepens inexorably, parallels with conditions in Weimar Germany become compelling. Seven years after the Yeltsin-led counterrevolution that destroyed the USSR, Russia has a currency that is effectively worthless, a profound split between the duma and a paralysed political executive and a society in the process of rapid disintegration. On September 7, the duma, in which the Communist Party of the Russian Federation (CPRF) is the biggest faction, rejected Viktor Chernomyrdin as prime minister designate for a second time. A third vote must take place within a week. If the duma rejects him again, parliament will automatically be dissolved. Despite its record for crying wolf, there seems little chance that the CPRF will back away this time, as it did in May over the nomination of Kiryenko. The party recognises that if it did so, it would lose all credibility.

In the run-up to the final vote, two other scenarios are possible. First, Yeltsin could decide to ditch Chernomyrdin and propose a candidate more acceptable to the duma. In this event, the CPRF, and with it the duma, would probably acquiesce, provided the package included a significant shift of power from president to parliament, with places for CPRF ministers in the new government.

The second scenario is that parliament could avoid the constitutional necessity of dissolution by impeaching Yeltsin - a president subject to impeachment cannot dissolve the lower house of parliament. Preparations for impeachment are underway, condemning Yeltsin, among other things, for the major part he played in the 1991 counterrevolution and the disastrous war in Chechnya. Debate in the duma prior to the second vote centered on Chernomyrdin’s ‘stabilisation plan’ for the Russian economy, a curious and contradictory document that has been received with a mixture of incredulity and anger by people ranging from Russian ‘official communists’ to western bankers and economists.

The so-called ‘plan’ envisages two stages. In the first stage, the government’s printing presses will be working overtime producing around 37 billion roubles of new currency to clear up wages and pension arrears, settle vast inter-enterprise debts and bring back some liquidity to the tottering banking system. The political logic behind this ‘controlled monetary emission’ (ie, financial debauchery) is difficult to grasp.

Are workers expected to be grateful to get their long-awaited wage arrears in the form of roubles, still damp from the press, that will have practically no purchasing power? Maybe Chernomyrdin hopes that the inevitable tidal wave of hyperinflation created by this policy will render workers so desperate that they will welcome any means, however draconian, of bringing it to an end? The real beneficiaries of the ‘stabilisation plan’ are to be the same oligarchs whose obscene greed did most to bring about the current crisis. It was their nominee, Deputy Prime Minister Boris Fyodorov, who co-drafted the plan with Chernomyrdin.

What the plan proposes is that all old tax debts will be ‘forgiven’ in return for a promise by the debtors that they will pay up promptly in future! Imagine the mirth with which this proposal was greeted by the so-called oligarchs: ie, the turncoats, thieves, swindlers and degenerates who actually run Russia. At a stroke, the trillions of roubles they owe to the state in back taxes will be written off, provided they swear on scouts’ honour to be good boys from now on. And for good measure, the banks they have driven into the wall as vehicles for speculation and money laundering will be rescued using some of the freshly minted roubles kindly provided by their buddies Chernomyrdin and Fyodorov.

If the first stage of the plan amounts to a surreal financial binge, the second will be a crash diet. From January 1 1999, an ‘economic dictatorship’ will be introduced. Russia will surrender its monetary sovereignty by adopting a currency board system, whereby every rouble in circulation has to be backed by a fixed amount of hard currency and precious metal reserves. In order to give some credibility to the scheme - and to get the further $10-15 billion in foreign loans needed to make the plan work at all - Chernomyrdin proposes that a proportion of these reserves should be held in German banks. The point about a scheme of this kind is that it presupposes the most draconian form of austerity and monetary discipline, with profoundly negative consequences for a country that is already on the verge of social disintegration. Very high interest rates are intrinsic to the system. Unemployment, already at 11% according to (understated) official figures, would rise dramatically. Public spending would be slashed. Tens of thousands of enterprises would be forced into closure.

In this light, it is not surprising that the plan has caused consternation at home and abroad. In the west, there is scepticism about it on two grounds: first, the ‘binge’ element is seen as critically destabilising. In August the Russian government pumped more than $2 billion into the banking system. Inflation for the month was 15%, implying annual rates of over 400% - and that is before the presses start rolling. No wonder the rouble, already devalued by more than two thirds, has not even begun to find a floor. Before the crisis it traded at six to the dollar; now it trades as low as 30, with 50 in sight. The hyperinflationary basis of the plan has been condemned by the IMF and there seems no chance of Russia getting the hard money needed to make it work. Secondly, there are doubts as to whether any Russian government would have the guts to carry through the tough measures necessary to make a currency board viable. Finally, with its reserves held and controlled abroad, the Russian central bank would not be able to act as a lender of last resort in a crisis: ie, it could not bale out ailing banks. This would make a systemic failure of the entire banking system quite probable in the event of the collapse of individual institutions.

Leaving aside these technical considerations, what about the social consequences, the effect of all this on ordinary Russian workers? In the short period since the rouble’s effective devaluation prices of staple consumer goods have gone through the roof. Increases in the region of 150% over the last 10 days are common. Hoarding is exacerbating already acute shortages of basic goods, including foodstuffs. Seven years after the Yeltsin counterrevolution agricultural production is down by more than 50% and Russia now imports almost half of all its food. The collapse of the rouble has had immediate effects on the food supply, because suppliers are not prepared to deliver food, even to the Moscow area, unless it is paid for in dollars. The prospects for the coming winter are dire. There was heavy rain right across Russia throughout August. As a result the grain harvest is late and of poor quality. Worse still, the potato crop has been blighted, with the result that much of it is already ruined. The official forecast is for a “very poor” harvest of this vital component of the Russian diet. Severe hunger, possibly starvation in the worst affected areas, is unavoidable. The International Red Cross is in the process of launching an emergency appeal for £10 million of food aid.

Economic fallout in terms of unemployment has so far been restricted to the foot soldiers of finance capital. Tens of thousands of ‘workers’ in the financial sector in Moscow have been summarily dismissed: brokers, salesmen, financial advisers, market analysts - all these people have been thrown overboard during the first phase of the crisis. The embryonic “new middle class” in Russia has found itself increasingly insecure and fearful. Petty bourgeois biznesmen (and bizneswomen) are easy prey for the anti-semites and brown nationalists.

So far as the working class is concerned, the rapid depreciation of the currency means that their roubles (when and if they receive them) will buy less and less of what few goods are available. Strikes, demonstrations and other protests are increasingly common. The miners, always on the front line in confrontation with the Russian government, recently staged a demonstration at the White House denouncing Chernomyrdin and calling for the impeachment of Yeltsin. According to one report, opinion polls show that “up to 75% of Russians would vote communist if elections were held today” (Sunday Business September 6).

Significantly, two of the main protagonists in the current struggle, general Aleksander Lebed and Gennadiy Zyuganov, leader of the CPRF, have stated that the situation in Russia is now as bad as or even worse than it was on the eve of the October Revolution. This raises a question of considerable interest and importance for us communists. Does a revolutionary situation really exist in Russia at this time? As a guide to analysing this question, let us remember a few words of Lenin:

“It is not sufficient for revolution that the exploited and oppressed masses understand the impossibility of living in the old way and demand changes; for revolution, it is necessary that the exploiters should not be able to live and rule in the old way. Only when the ‘lower classes’ do not want the old and when the ‘upper classes’ cannot continue in the old way, then only can revolution conquer ... revolution is impossible without a national crisis affecting both the exploited and the exploiters. It follows that for revolution it is essential, first, that a majority of the workers (or at least a majority of the class-conscious, thinking, politically active workers) should fully understand that revolution is necessary and be ready to sacrifice their lives for it; secondly, that the ruling classes be in a state of governmental crisis which draws even the most backward masses into politics ... a symptom of every real revolution is the rapid ... increase in the number of representatives of the oppressed toiling masses - who hitherto have been apathetic - capable of waging the political struggle …” (VI Lenin Selected Works Moscow 1939, Vol 10, p 127).

It is obvious that one of the preconditions for revolution is indeed present in Russia today. There is no doubt that the “exploiters” (ie, the Yeltsin administration and the oligarchs’ kleptocracy) “are not able to live and rule in the old way”. The other precondition, however, does not exist. At present, we see no evidence of revolutionary unrest among the “lower classes”. It is undoubtedly true that they do not “want” the old way, but as yet there is no sign of that mass united action around a common programme and a single party, which is surely a precondition for revolution implicit in Lenin’s definition.

It goes without saying that the CPRF bears no resemblance whatever to such a party. Its Great Russian chauvinist rhetoric harks back to the administrative-command economy of the Soviet Union, but today its calls for increased state intervention and an end to profiteering fall far short of a return to the past. And of course its ‘socialism’ lacks any trace of real working class democracy. If, as seems possible, the CPRF is brought into government, the duty of revolutionary communists will be to unite against it and to organise an independent working class alternative.

Michael Malkin