Russia

This was soon done. In August 1992 Yeltsin signed a decree disposing of state property to raise money. Vouchers were issued entitling every adult in the country to 10,000 rubles-worth of shares in the enterprise or institution with which they were associated. Alternatively they could sell their vouchers. Voucher auctions would be arranged. The randomness of the method met with the approval of Western economic theorists. Most people might have no idea of value, they said, but the vouchers would surely end up in the hands of people who did. And so it turned out. Most Russians, bemused by the process, sold their vouchers — many of them to touts who offered ready money for them on the street. Managers and new businessmen, who had a better understanding of values than the general public, made killings and manoeuvred themselves into positions to make more. The proceeds, intended to reduce the state’s massive deficit, turned out to be disappointing, however, because during the interval that passed before they reached the treasury their value had been savaged by inflation. On the other hand gigantic windfall profits went to a handful of sharp-eyed and unscrupulous operators who exploited the reformers’ mistakes.

The beneficiaries were mainly young men in the know. Since there were so few of them, and the industries they came to control dominated the Russian economy, they were soon wielding political power as well as financial clout. Aside from Viktor Chernomyrdin, a government functionary who was no longer young, the first generation of multimillionaires included Mikhail Khodorkovskii, Vladimir Gusinskii, Petr Aven, Roman Abramovich and Boris Berezovskii. Able youngish, civil servants, city functionaries, economic advisers, scientific researchers, they turned themselves into biznesmeny and swiftly graduated to become tycoons dominating important industries — aluminium, natural gas, air transport, banks, the media, and oil. Several of them came to be closely connected with organized crime as well as with government, for the atmosphere, in Moscow particularly, closely resembled that of Chicago during prohibition and they needed protection, whether from former KGB operatives or from the Chechen and other organized mobs. ⁶

While the plutocrats counted their assets, the masses counted the costs of the transition. At least a third, and probably over half, the population had been forced below the poverty line, and the health statistics of the first years of post-communist freedom told their own story. Between January 1992, when the switch from a planned to a market economy began, and June 1994 the death rate in Russia rose by over 30 per cent, to a level unknown in any country that was not at war or suffering from famine. The rise in mortality among males of working age was particularly steep. They died from heart attacks, strokes, alcohol poisoning, suicide and murder. A UNICEF study attributed the sharp increase in adult deaths to stress arising from fear of unemployment, although despair at the collapse of a familiar world seems also to have played a part. A dramatic increase in infant mortality, which more than doubled in the period 1991-3, was no less alarming. Child health had been improving steadily until 1990. ⁷ Now, suddenly, health-care services and education were in danger of collapse. They would have done so had conscientious teachers, doctors and nurses not continued to work even when their modest salaries were unpaid. And unpaid workers isolated amid the vast wastes of the north also worked on for lengthy periods without reward simply because they and their families could not afford the costs entailed in moving and starting a new life elsewhere.

In December 1993 President Yeltsin approved a new coat of arms for Russia. It took the form of a Byzantine eagle with two heads surmounted by three crowns. ⁸ It might seem odd that Yeltsin, who had played a key role in stripping Russia of empire, should have adopted this imperial symbolism for the new, truncated Russia, but it was not the only irony. A former Communist apparatchik, he was now the scourge of Communism. This and his pious commitment to the cause of democracy, which he paraded as religiously as any seventeenth-century tsar paraded his commitment to Christ and all the saints, commended him to Washington and London, despite the fact that only two months before adopting the imperial insignia he had ordered troops to launch a bloody attack on parliament and shut it down.