In March 1991, when Gorbachev launched an all-union referendum about the future Soviet federation, Russia and several other republics added some supplementary questions. One of the Russian questions was whether the voters were in favour of a directly elected president. They were, and they chose Yeltsin. He used his newfound legitimacy to promote Russian sovereignty, to advocate and adopt radical economic reform, to demand Gorbachev's resignation, and to negotiate treaties with the Baltic republics, in which he acknowledged their right to independence. Soviet attempts to discourage Baltic independence led to a bloody confrontation in Vilnius in January 1991, after which Yeltsin called upon Russian troops to disobey orders that would have them shoot unarmed civilians.
Yeltsin's politics reflected the rise of Russian nationalism. Russians began to view the Soviet system as one that worked for its own political and economic interests at Russia's expense. There were increasing complaints that the “Soviets” had destroyed the Russian environment and had impoverished Russia in order to maintain their empire and subsidize the poorer republics. Consequently, Yeltsin and his supporters demanded Russian control over Russia and its resources. In June 1990 the Russian republic declared sovereignty, establishing the primacy of Russian law within the republic. This effectively undermined all attempts by Gorbachev to establish a Union of Sovereign Socialist Republics. Yeltsin appeared to be willing to go along with this vision but, in reality, wanted Russia to dominate the new union and replace the formal leading role of the Soviet Union. The Russian parliament passed radical reforms that would introduce a market economy, and Yeltsin also cut funding to a large number of Soviet agencies based on Russian soil. Clearly, Yeltsin wished to rid Russia of the encumbrance of the Soviet Union and to seek the disbandment of that body. In the later Gorbachev years, the opinion that the 1917 Bolshevik Revolution and establishment of the U.S.S.R. were mistakes that had prevented Russia from continuing along the historical path traveled by the countries of western Europe and had made Russia more economically backward vis-à-vis the West gained greater acceptance.
Collapse of the Soviet Union
An ill-conceived, ill-planned, and poorly executed coup attempt occurred Aug. 19–21, 1991, bringing an end to the Communist Party and accelerating the movement to disband the Soviet Union. The coup was carried out by hard-line Communist Party, KGB, and military officials attempting to avert a new liberalized union treaty and return to the old-line party values. The most significant anti-coup role was played by Yeltsin, who brilliantly grasped the opportunity to promote himself and Russia. He demanded the reinstatement of Gorbachev as U.S.S.R. president, but, when Gorbachev returned from house arrest in the Crimea, Yeltsin set out to demonstrate that he was the stronger leader. Yeltsin banned the Communist Party in Russia and seized all of its property. From a strictly legal point of view, this should have been done by court order, not by presidential decree. Russia systematically laid claim to most Soviet property on its territory.
Martin McCauley Dominic Lieven
Post-Soviet Russia
The Yeltsin (Yeltsin, Boris) presidency (1991–99)
The U.S.S.R. legally ceased to exist on Dec. 31, 1991. The new state, called the Russian Federation, set off on the road to democracy and a market economy without any clear conception of how to complete such a transformation in the world's largest country. Like most of the other former Soviet republics, it entered independence in a state of serious disorder and economic chaos.
Economic reforms
Upon independence, Russia faced economic collapse. The new Russian government not only had to deal with the consequences of the mistakes in economic policy of the Gorbachev period, but it also had to find a way to transform the entire Russian economy. In 1991 alone, gross domestic product (GDP) dropped by about one-sixth, and the budget deficit was approximately one-fourth of GDP. The Gorbachev government had resorted to printing huge amounts of money to finance both the budget and the large subsidies to factories and on food at a time when the tax system was collapsing. Moreover, the price controls on most goods led to their scarcity. By 1991 few items essential for everyday life were available in traditional retail outlets. The entire system of goods distribution was on the verge of disintegration. The transformation of the command economy to a market-based one was fraught with difficulties and had no historical precedent. Since the central command economy had existed in Russia for more than 70 years, the transition to a market economy proved more difficult for Russia than for the other countries of eastern Europe. Russian reformists had no clear plan, and circumstances did not give them the luxury of time to put together a reform package. In addition, economic reform threatened various entrenched interests, and the reformists had to balance the necessities of economic reform with powerful vested interests.
Although Soviet industry was one of the largest in the world, it was also very inefficient and expensive to support, complicating any changeover to a market-based economy. Industry was heavily geared toward defense and heavy industrial products whose conversion to light- and consumer-based industries would require much time. The industrial workforce, though highly educated, did not have the necessary skills to work in a market environment and would therefore need to be retrained, as would factory and plant managers.
In an effort to bring goods into stores, the Yeltsin government removed price controls on most items in January 1992—the first essential step toward creating a market-based economy. Its immediate goal was achieved. However, it also spurred inflation, which became a daily concern for Russians, whose salaries and purchasing power declined as prices for even some of the most basic goods continued to rise. The government frequently found itself printing money to fill holes in the budget and to prevent failing factories from going bankrupt. By 1993 the budget deficit financed by the printing of money was one-fifth of GDP. Consequently, the economy became increasingly dollarized as people lost faith in the value of the ruble. Inflationary pressures were exacerbated by the establishment of a “ruble zone” when the Soviet Union collapsed: many of the former republics continued to issue and use rubles and receive credits from the Russian Central Bank, thereby further devaluing the ruble. This ruble zone became an onerous burden for the Russian economy as an additional source of inflation. In the summer of 1993 the government pulled out of the ruble zone, effectively reducing Russian influence over many of the former Soviet republics.
During the Soviet era the factory had been not only a place of work but was also often the base of social services, providing benefits such as child care, vacations, and housing. Therefore, if the government allowed many industries to collapse, it would have had to make provisions not only for unemployed workers but for a whole array of social services. The government's infrastructure could not cope with such a large additional responsibility. Yet the inflation caused by keeping these factories afloat led to waning support for both Yeltsin and economic reform, as many average Russians struggled to survive. Starved for cash, factories reverted to paying workers and paying off debts to other factories in kind. Therefore, in many areas of Russia a barter economy emerged as both factories and workers tried to accommodate themselves to the economic crisis. Moreover, debts between factories were enormous; though they were diligently recorded, there was little hope of eventual collection. Thus, it was not uncommon for workers to go months without being paid and for workers to get paid in, for example, rubber gloves or crockery, either because they made such things themselves or because their factory had received payment for debt in kind.