There were two Soviet state institutions that Yeltsin did not want to seize, but rather destroy - the Soviet Congress of People's Deputies and the Soviet presidency. He and his government first sought to discredit the Soviet parliament by blaming Soviet legislators for tacit acquiescence to the coup. As Yeltsin stated the week after the coup attempt, 'During the days of the putsch, there was no supreme legislative power in the country, there was no parliament. The junta had a free hand. Through its inaction, the Supreme Soviet provided the junta with most-favored status.'[66] In response to Yeltsin's prodding, the Soviet Congress approved on 5 September 1991 a new law on governing the Soviet Union during a transitional period in which the Congress de facto surrendered its governing authority to an executive body called the USSR State Council. The axe fell next on the Soviet presidency. Although enjoying Gorbachev's co-operation during this volatile period, Yeltsin wanted to use the opportunity of the failed August putsch to eliminate his nemesis from politics forever.[67] To eliminate Gorbachev's position and prevent the Soviet leader from attempting to create a new looser union, Yeltsin met with his counterparts from Ukraine and Belarus to sign the Belovezhskaia Accord on 8 December 1991. This short accord effectively dismantled the USSR.[68] Amazingly, it met little resistance in any of the three signatory countries. By the end of the year, the largest country in the world ceased to exist.
The new political system
Like many other revolutionary leaders in similar situations, Yeltsin could have taken advantage of August 1991 to establish an authoritarian regime.[69] Several of Yeltsin's advisers did urge him to consider an authoritarian strategy, at least as an interim solution to collapsing state power throughout the country and as a means for introducing unpopular economic reforms. On the other hand, Yeltsin could have taken steps to consolidate a democratic polity. He could have disbanded old Soviet government institutions, adopted a new constitution codifying the division ofpowerbetween executive, legislative andjudiciary as well as federal and regional bodies, and called new elections to stimulate the development of a multi-party system. Many leaders in the democratic movement expected him to do so. Yeltsin, however, pursued neither strategy.
Although he did not attempt to erect a dictatorship, he did little to consolidate a new democratic polity. Importantly, he resisted calls for new national elections and actually postponed regional elections scheduled for December 1991. He also did not form a political party. He delayed the adoption of a new constitution, even though his own constitutional commission had completed a first new draft as early as October 1990. Yeltsin also failed to dismantle many Soviet-era governmental institutions, including, most importantly, the Supreme Soviet and the Congress of People's Deputies of the Russian Republic.[70]
Launching economic transformation
Yeltsin's priority was not the creation or consolidation of a new democratic political system (or a new authoritarian regime). Rather, once the borders of the new Russian state were secure, Yeltsin turned his attention to disman- tlingthe command economy and creating a market economy. He and his new government inherited a bankrupt economy - no hard currency reserves, a ballooning budget deficit, foreign debt of $80 billion, declining industrial production, a monetary overhang and a scarcity of goods that compelled many experts to predict starvation. After some hesitation, Yeltsin came to believe that only radical reforms could redress these desperate economic conditions. He hired a team of young reformers, led by his new deputy prime minister for the economy, Egor Gaidar, to initiate such reforms, which acquired the unfortunate label of 'shock therapy'.[71]
Gaidar's programme for economic reform called for immediate liberalisation of prices and trade while at the same time achieving macroeconomic stabilisation through control of the money supply and government spending.[72] Once stabilisation had been accomplished, massive privatisation was to follow. Gaidar's plan was consistent with his neo-liberal approach to markets and market development; the less the state intervened in the market the better.
The consequences of Yeltsin's reform sequence and strategy
Yeltsin's greatest achievement as president was the peaceful dissolution of the Soviet Union. Initiating economic reform was another important accomplishment. Executing the measures successfully, however, was not.
InJanuary 1992, Yeltsin and Gaidar did succeed in introducing dramatic price liberalisation. Prices on most food items (exceptions were milk, bread and other main staples) as well as almost all consumer durables were freed overnight. Significant price controls, however, remained in the energy sector. At the time, government officials, trade union chiefs and journalists all predicted riots, work stoppages and general social unrest. Gaidar himself predicted his own dismissal by the end of the month. None of these scenarios transpired. This peaceful transition towards free prices represented a monumental step for a country where prices had been controlled for over sixty years. By the end of the decade, few goods were rationed, long queues were rare and Russian shops were filled with goods to sell.
The January 1992 price liberalisation produced a sharp rise in inflation. What is striking in retrospect, however, is how low inflation was in comparison with the rates to follow. Monthly inflation rates steadily declined from 38 per cent in February 1992 to 9 per cent in August 1992. Politics, however, quickly eroded Gaidar's ability to implement macroeconomic stabilisation.[73]Tight government money threatened directors and workers of large state enterprises. These groups used the moment of the Sixth Congress of People's Deputies in the spring of 1992 to launch an assault against Gaidar's reforms. Rather than call for Gaidar's dismissal, leaders of the parliamentary faction, Industrial Union, mobilised other conservative forces in the parliamentary body to strip the president of his extraordinary powers. Ambiguously defined rules of the game, including most importantly the absence of a new Russian constitution, made possible this kind of strategy. Although Yeltsin fought and defeated the original move to dilute his executive powers, he did later compromise with the anti-reform coalition in the parliament by agreeing to appoint three new deputy prime ministers closely associated with the industrial lobby - Vladimir Shumeiko, Georgii Khizha and Viktor Chernomyrdin - into his government. During the painful first year of the transition from the command economy, Yeltsin began to lose confidence in his young team of economic advisers.[74] By the end of the year, Yeltsin acquiesced to pressure from the Russian Congress and dropped his acting prime minister Gaidar. Yeltsin replaced Gaidar with the more conservative Chernomyrdin, the former head of the gas company, Gazprom. For many, this was the end of economic reform in Russia.
66
Yeltsin, speech to Extraordinary Congress of the USSR Congress of People's Deputies, in
67
Yeltsin and Gorbachev despised each other. On their criticisms ofeach other during the autumn of 1991, see Mikhail Gorbachev,
68
Agreement of the Creation of the Commonwealth of Independent States', 8 Dec. 1991; reprinted in Alexander Dallin and Gail Lapidus (eds.),
69
On this pattern, see ThedaSkocpol, 'Social Revolutions and Mass Military Mobilization',
70
On the reasons for inaction, see Michael McFaul,
71
On the general formula, see Anders Aslund,
72
On the formation of this team, see Anders Aslund,
73
For details, see Andrei Shleifer and Daniel Treisman,