Armageddon Averted

Summary

Introduction

note: sub-headings in the introduction are my own.

Perestroika

• in 1985 a new movement came to power: “socialism with a human face”
• this emerged during Nikita Khrushchev’s time and influenced an entire generation - a generation led by Mikhail Gorbachev
• they believed in reforming the economy, relaxing censorship to increase the population’s allegiance to socialism, and that the Communist Party could be democratized
• this movement started by Gorbachev was called perestroika
• unintentionally, it ended by destroying the Soviet Union

Meek Dissolution

• there were 71 million ethnic Russians living outside their nominal homeland after the Soviet collapse.
  • they were living in Ukraine, Kazakhstan, etc, all of which were part of the Soviet Union
• perhaps what’s most shocking is the way the Soviet Union dissolved itself: in a very meek and quiet way
• there were a few all-out wars, most in the Caucasus, and then one in Tajikistan and Moldova, but besides that it was all ‘peaceful’
• a disastrous Armageddon, perhaps even nuclear, chemical, or biological, could’ve easily occurred after the collapse, but it didn’t which is remarkable

The Primary Question

• why did all the Communist/Soviet elite, armed to the teeth with soldiers and weapons, not defend the Union with all their might?
• the Soviet Union, near the end of their time, never faced foreign occupation, insubordination in their military, or even sustained civil disobedience
• so how did they even collapse? Well, the Soviet elite destroyed their own system, on their own.
• the shocking thing was not that the Soviets collapsed - that was expected, rather the fact that there was no “Armageddon” or full-blown war
• this book aims to address the above few points in this sub-heading

Russian Republic

• Russia was the largest Soviet state
• Russia inherited everything that caused the Soviet collapse, as well as dealing with the aftermath of the collapse
• this is another aim of the book: elucidating the importance for Russia of the Soviet inheritance
• Russia, post Soviet collapse, was not taken over by “radical reformers” or “democrats”, rather the people who ruled and shaped post-Soviet Russia were communists themselves! They were people who came from elite Soviet schools and the Communist Youth League
  • the collapse didn’t suddenly end in Dec 1991 as we are led to believe
  • a lot of the state institutions were the same, like the KGB, State Procuracy, and Central Committee apparat
• all the analysts at the same were expecting Russia to undergo a major transition, to even possibly become a “paradise”, but this was a foolish thing to think. Think about how much a US President can change during their term - not much (in the grand scheme of things). So how would a post-Soviet Russia, led by the same Soviet elite, be able to transition that much?

Chapter 1: History’s Cruel Tricks

• in October 1973, the Arab countries and Israel went to war with each other. This led to a 400% increase in oil prices. The US economy was battered and destroyed. Thousands lost their jobs. Unemployment doubled. Thousands of factories were shutting down.

Oil Windfall and Institutional Shortfall

• between 1961 and 1969, five dozen new oil fields were identified in Siberia. The Soviets went from being an importer of oil, to being an exporter
• even better for them, this happened just a few years before the start of the Arab-Israel war of 73, so the Soviet Union got to take advantage of the extremely high oil prices
• the Soviets experienced the greatest economic growth they’ve ever had
  • it’s not far fetched to say that the Soviets may have collapsed had they never found these oil fields since they were in a bad economic spot and were heading into a worse direction due to the Arab-Israel war
  • also, in the 50s, the US-backed coup in Iran helped block Soviet access to Iranian oil
• furthermore, the other oil-exporting countries (like Arab countries) were top customers for Soviet weapons. So as they got richer, they purchased more Soviet weapons, causing the Soviets to further increase their cash flow
• what did they do with this increased cash flow?
  • build up their own military to the point where they were on par with the US military
  • help their Eastern European satellites who were impacted with high oil prices
  • helped cover the costs of the costly Afghanistan war
  • more money for Soviet elite
  • purchased Western goods and technology that provided benefits to the Soviet population
• in 1986 oil prices plummeted and the Soviets lost their cash-cow. They were now forced to address their structural economic problems
• the Soviets got most of their wealth from industry, transport, and construction. Most of the industry was built in the 20s and 30s, so it was very old
  • the post-Soviet Russians inherited history’s largest ever assemblage of obsolete equipment
• so the Soviet economy was in trouble due to its very old and obsolete industry. Even though they planned to get rid of the ‘junk’ and replace it with new sectors, it wasn’t working. This is because they lacked the indispensable institutions that make markets work
• the market is not an economic but rather a political and institutional phenomenon
  • thus the Soviet’s main problem was not economic, rather it was political and institutional

The Twentieth Century’s Great Turn

• the Soviets also had a geopolitical dilemma - they were locked in a competition with the US
• this competition/rivalry was economic, military, technological, political, cultural, and moral
• the Soviet Union was an experiment in Socialism. Capitalism started to get a bad rep after WW1 and Socialism sought to replace it
  • if Socialism is proven to be worse than capitalism, then the Soviet Union’s entire existence is undermined
• After WW2, capitalism was ‘upgraded’ and this hurt the Soviets:
  • all the previously fascist states become democratic
  • the economy was booming in capitalist countries. Home ownership was increasing, consumer goods become very cheap, expanded health and retirement benefits, etc
  • capitalist countries adopted the ‘welfare state’, challenging socialism on its own turf
• After WW2 we also saw decolonization happen
  • by the 70s almost all overseas colonies became independent
  • the Soviet was a land empire comprising of 15 republics. All with their own national institutions and national consciousness.
  • This decolonization movement was not a good thing for the Soviets
• after Stalin had pushed back Hitler at the end of WW2, this allowed Stalin to conquer Eastern European lands
  • this ended up not being good move. He had to concede on a lot of things in order to make them happy, such as allowing the Catholic Church to play a prominent role in society in Poland, and allowing some private enterprise in Hungary.
  • these things undermined the very essence of Socialism
• these various Soviet eastern European satellites become increasingly dependent on western imports as a way to pacify the revolts within their countries
• “socialism was utterly dependent on the fortunes of capitalism” - p. 23
  • without western imports, the Soviet Eastern European republics would’ve collapsed

Panic, Humiliation, Defection

• after WW1, the Soviets rapidly industrialized, but after winning WW2, they got ‘lazy’ and didn’t bother keeping up to compete with the rest of the world
• ecological degradation also reached a tipping point
  • infant mortality began to rise
  • respiratory ailments among children became epidemic
  • cancer increased
  • alcoholism increased
• it was clear that the competition with capitalism was unwinnable
• what greatly accelerated the Soviet’s decline was Gorbechev’s perestroika
• Soviet elites were panicking due to their country’s relative backwardness compared to the US and the west
  • there was internal defection among the Soviet elite
  • many Soviet elite travelled to the west and came back from western made goods, indirectly approving of the west’s superiority over the Soviets
• Soviet leadership roles were given to the highest bidder. The country had essentially become a kleptocracy (corrupt rulers expropriating the wealth of the people)

Socialist Idealism

• corruption was ever-present after Stalin’s time
  • Stalin was effective at producing mass-terror, something the following leaders could never do
• all leaders after Stalin tried to tackle the corruption problem, one way or another, but nothing worked
• Gorbachev really wanted to revive socialism, that’s why he launched perestroika
  • it was an honest effort to make socialism live up to its promises. It was the party’s last hope
  • “perestroika, was driven not by cold calculation about achieving an orderly retrenchment but by the pursuit of a romantic dream” - p. 30

Chapter 2: Reviving the Dream

• the aftermath of WW2 was millions of Soviet soldiers who experienced how the world was outside of the Soviet Union. They found out the world is actually much better off than the propaganda they were being fed by the Communist Party
  • a lot of these people ended up being thrown into the Gulags. They were a threat to the Soviet elite
• the Soviet victory in WW2 was not just a war victory, but a moral victory to. Everyone knew about it in the Soviet Union while they were not told about the bad things happening, like the Gulags
  • because of this victory, the government didn’t bother to change to improve
• Stalin died in 1953 and Nikita Khrushchev launched a de-Stalinization campaign in 1956

The Education of a True Believer

• Gorbachev was born in the north Caucasus in 1931 on a farm into a peasant family
• he studied in Moscow and rose the ranks in the party
• he took a roadtrip across Italy and France with his wife. He saw that people there were much wealthier and that the Soviet Union had a lot of catching up to do

Creeping Invasion of the West

• by the 1960s, radios with wave receivers become popular and this allowed people to ingest western media
  • the Soviets tried to prevent this by playing static on some stations, but some people figured out ways around it
• by the 1980s, 93% of households had a TV set. Some western shows were being translated into Russian
  • people watched these not just for entertainment, but also to get a clue of how life is like in those parts of the world
• western consumer culture became widespread in Soviet culture
  • western movies, music, sport teams, clothing, etc, all became popular

Abiding Allegiance to Socialism

• Soviet citizens started waking up to the reality of life in the west - it was simply much better
• discussing politics and socialism became ‘kitchen table’ talk within your home.
  • people didn’t hate the Soviets, they just wanted them to fulfil their socialist promises like inexpensive housing, health care, paid maternity leave, public education, and consumer goods
• scientists needed access to western papers and research. Most of their requests were denied.
• Soviet elite were scared to allow too much western influence because they allowed it in Czechoslovakia and just months later tanks had to roll in to quell revolt
• nationalist movements were not allowed to rise up, or at least it had to be second to the Socialist/Communist movement
• direct access to life in the west was reserved for the top Soviet elite. They had elite hospitals, schooling, supply networks, etc
  • they were basically a privileged class, insulated from the rest of the country
  • their existence was the greatest contradiction in post-war Soviet Union, and the most volatile

Jockeying Invalids

• Brezhnev was dying. During the last few years of his rule, he was largely bed-ridden.
• in 1982, he died. Yuri Andropov became leader but less than a year later he also fell extremely ill.
  • Andropov laid the foundation for Gorbachev to become leader
  • in 1984, Andropov died
• Chernenko, who was Andropov’s second in command, took power, but he was already quite ill. Chernenko chose Gorbachev to be second in command

The Unavoidable Generational Shift

• in 1985, Chernenko died. There was no major succession crisis - Gorbachev was the obvious next leader
• the original generation of Soviet elite were mainly dead by this point
  • Suslov and Brezhnev and 1982, Andropov in 1983, Ustinov in 1984, and Chernenko in 1985
  • only Tikhonov and Gromyko were still alive, albeit extremely old
• Gromyko did want to become leader, and tried. But it was never seriously considered.
• Gorbachev represented the new generation. He truly believed in humane socialism. He was hailed as the reformer that the Soviet Union needed
  • we all know what happens later. The Soviets eventually collapse (Gorbachev was the last leader)

Chapter 3: The Drama of Reform

• Gorbachev and his inner circle had to deal with the ‘reformist generation dilemma’: how to bridge the gap between socialism’s ideals and its disappointing realities, within the context of the superpower competition. - p. 59

Economic Halfway House

• throughout the 60s and 70s, the Soviets tried to improve the economy for the average consumer
• since this was during the Cold War, the Soviets were reluctant to import western tech, but eventually they did in order to keep up
  • still, Soviet factories did not want to use them. In the 80s, the Soviets had about 200k microcomputers in use, while the US had 25 million
• lots of economic reform policies simply did not work
  • Gorbachev launched an anti-alcohol policy. The result? Underground breweries. Less tax money for the state
• the Soviet elite knew they needed to adopt ideas of private property and market that were fundamentally anti-Socialist in order to keep up with the growing wealth of the capitalist west
  • they did not want to do this as this would destroy the Soviet identity
• soon after, as a result of the ‘economic halfway house’ they put themselves sin, output plummeted, shortages became severe, and the Soviets had to take western loans
  • the Soviets fell into deep debt

Ideological Self-Destruction

• in 1986-1987, the Soviet Media with the permission of the government, allowed the discussion of controversial issues like drug addiction, abortion epidemic, poverty, Afghanistan War, etc. They also released long-banned movies, banned books (like The Gulag Archipelago), etc
• the editors of the most famous newspaper in the Soviet Union would receive 5k+ letters a day, and it’s very clear the people were waking up to the injustice in the Soviet Union
  • pro-Americanism was growing within the Soviet Union
• while Gorbachev’s reforms and perestroika movement was based on anti-Stalinist ideas, it was hard to tell who backed Gorbachev for that same reason (anti-Stalin), or another reason like anti-Socialism in general
  • especially since the late 80s when media became open, people woke up to how the west is living and a lot of people, especially the young generation, did not want socialism any more
• perestroika had an unintended consequence: the rise of nationalist movements
  • places like Armenia, Lithuania, Latvia, and Estonia all supported perestroika and used it as a way to vouch for independence from the Soviet Union

Virtuoso Tactician

• Gorbachev took steps to weaken the party’s central authority; he intended to hold elections
• he unknowingly was giving up a unitary structure of government to a federalized one
  • in the Russian Empire, there were no republics, just provinces
  • then the Soviets established the Union of Soviet Socialist Republics (USSR)
  • the Union had 15 nationally designated republics, each with a state border, constitution, parliament, and a ministry of foreign affairs
• the Soviet Union had 2 parallel, overlapping administrative structures: party and state
  • if one were to remove the (Communist) Party, then you’d have a bunch of national republics, each with the choice to legally withdraw from the Union
  • so although the party was administratively redundant, it was critical to the integrity of the Soviet State. “it was like a bomb inside the core of the Union” - p. 79
• the various republics were connected just by influence from the Party. It seems that Gorbachev and his people did not understand this.
• all of the reforms Gorbachev had introduced were decreasing the party’s central control mechanism and discrediting the party’s ideology

The Missing Suslov

• the person best equipped to reverse the damager Gorbachev caused was his second-in-command: Ligachev
  • Ligachev lacked the stomach to do anything, unlike his predecessor Mikhail Suslov, who helped mastermind the plan to remove Khrushchev from office
• Gorbachev’s plan to “reform socialism” was not a reformation, it was a dissolution
• Ligachev, because he shared Gorbachev’s belief in the possibility of reforming the system, failed to notice that perestroika, the very thing both him and Gorbachev were pushing, was the thing causing the system to fail

So to sum up, Gorbachev dismantled every aspect of the Soviet Union (unwillingly and unknowingly):

• he destroyed the planned economy
• he destroyed the Soviet/socialist ideology
• he destroyed the Union and favored republics

Chapter 4: Waiting for the End of the World

• Brezhnev Doctrine: the use of force to maintain loyal socialist regimes
• Gorbachev worked on reducing the usage of the Brezhnev Doctrine, and even abandoned it in the late 80s when he told the eastern European communist countries that they were on their own. He also pulled out of Afghanistan, something that was anti-Brezhnev Doctrine
• why did he do this? It was a way to defuse the superpower confrontation with the US. He wanted to calm down the cold war. And it was successful. He achieved major arms reduction, albeit one sided.
• Perestroika reforms were now underway all over including Poland and Hungary. Hardliners in East Germany and Romania tried to resist but eventually capitulated.
• these reforms would prove detrimental:
  • in Poland, they allowed elections in 1989. The Solidarity opposition party (anti-Communist) won 99 out of 100 seats in the new Senate! For the Sejm (lower house), the communists rigged it so only 161 out of 460 seats were up for election. Even then, Solidarity won 160 seats
  • Furthermore, the communist leader elected, General Wojciech Jaruzelski, ended up inviting anti-Communist opposition to form the government
  • In East Germany, thousands of people began fleeing to other socialist countries then seeking asylum at the West German embassies
• where was the Soviet military in all this? They were uninformed and left out of any discussions.
  • additionally, Gorbachev didn’t want to use the Brezhnev Doctrine. He said eastern Europe was on their own.
• Gorbachev was shocked at everything happening in eastern Europe. He demanded that NATO guarantee they will not take over East Germany.
  • Gorbachev withdrew the Soviet forces from East Germany, without even having guaranteed neutrality from Germany
• Gorbachev’s non-intervention in Eastern Europe should be viewed in light of the following:
  • his dismantling of the Brezhnev Doctrine
  • France’s brutal war to keep Algeria, as well as other western colonial power activity (did Gorbachev really want that?)
  • domestic Soviet elite were saying that ‘sacrificing’ eastern Europe was necessary to gain favour with the west. Gaining favour with the west was necessary because the Soviets could no longer afford the superpower competition.
• in March 1990, the parliament of Lithuania voted 124 to 0 in favour of seceding from the Soviet Union
  • Latvia and Estonia followed shortly
  • these 3 Baltic nations were part of the Russian Empire, but became independent in 1918 once the Communists took control over Russia
  • then in 1940, the Soviets occupied and annexed all three countries. Hence it makes sense why they were the first to declare independence from the Soviets in the 90s
• Next, the parliaments of Ukraine, Belorussia, and Moldova proclaimed independence, as well as Georgia and Armenia
• at this point, Gorbachev suddenly announced a new “Union Treaty” to replace the 1922 original
  • this new treaty specified Russian as the main language of each Republic, primacy of Union laws over Republic laws, gave Republics only little control over their own resources, and failed to mention the USSR constitution’s guarantee of secession clause
  • of course, no Republic accepted this
  • this was just a silly last-ditch effort by Gorbachev to try and retain some degree of control
• in Jan 1991, Red Army soldiers were deployed in Lithuania but were quickly called back after 13 deaths
• in March 1991, a new Union Treaty brought back rights to secession, but with lots of restrictions
  • most Republics didn’t even bother responding to it
• 1990 and 1991 were confusing years. Gorbachev was in panic mode, trying to salvage the Union.
• in April 1991, Gorbachev tried to negotiate with the republics, above all, the republic of Russia, who was led by Boris Yeltsin (who became the first leader in the post-Soviet Russia)
• the Soviet Union had millions of well armed soldiers. They were not used to hold off the collapse of the Union. If they were used, the collapse would’ve been very nasty and bloody.

The Crowd-bather

• Boris Yeltsin was born in 1931, the same year as Gorbachev
• while Gorbachev was more political (writing a thesis on the superiority of communism over capitalism) Yeltsin was more of an engineer (writing his university thesis on the construction of coal mines)
• he became his province’s first secretary in 1976 and excelled at “bathing in the crowd”. He was a crowd-pleaser. He met with the blue collar workers and students. He went live on local TV. He was a populist.
• eventually, in 1985, Yeltsin was brought to Moscow as secretary for construction. He would soon emerge as a rival to Gorbachev
• when Gorbachev introduced elections for a new Congress of People’s Deputies, Yeltsin won in a 90% landslide (1989)
• these congress sessions were televised live and 200 million people would tune it. Yeltsin became a crowd favourite
• in 1989, there was an assassination on his life. He was thrown off a bridge. He survived
• in 1990 he was elected to a Russian republic Congress of People’s Deputies and later elected as chairman of its Supreme Soviet
  • He led the movement for sovereignty for Russia
• Yeltsin was a man of the people and this was a problem for Gorbachev
• in 1991, Gorbachev held a referendum on preservation of the Union and Yeltsin also included a qusetion on creating a presidency of the Russian republic
  • 80% voted in favour of the Union
  • Yeltsin also got his presidency - a few months later he held an election and he won
• At this point, Moscow had 2 presidents
  • Gorbachev, elected by parliament
  • Yeltsin, elected by the people
• in 1991 after the above events, a Union Treaty negotiation occurred between the leaders of 9 republics
  • the clauses included to give most ministerial functions to the republics, uphold supremacy of republic laws (over Union ones), called for dissolution of the UUSR Supreme Soviet, and made Union membership voluntary
  • this treaty was the END of the Soviet Union
  • many Soviet elite tried to make Gorbachev turn back on it. They published it in order to cause uproar
• the end of the Soviet Union was made clear in 1991 when Yeltsin declared Russian ownership over USSR oil and gas industries on Russia soil, as well as his declarations to form a Russian KGB and Russian defense ministry
• the KGB chief leaked a transcript of an eavesdropped conversation between Yeltsin, Gorbachev, and Nazarbaev (Kazakh leader), that named every USSR official that needed to be removed
• on the 19th of August 1991, the men who stood by as Eastern Europe broke from the Soviet Union, sent tanks rolling into Moscow

Beer Hall Putsch

• the KGB chief was Vladimir Kryuchkov, a man who supported Gorbachev fully. But in August 1991, Kryuchkov confined Gorbachev at his dacha and invoked ‘emergency powers’ that parliament has given to the Soviet president
• a State Emergency Committee was formed whose goals were to uphold the laws and integrity of the Soviet Union. This was led by Kryuchkov and Yazov (defense minister)
  • the military was mobilized
  • this event was called the “putsch”
• Yeltsin flew in from Kazakhstan to Moscow and made it to the “white house”, the site of the Russian republic government
  • the KBG tried to stop him but he made it there with the help of his own loyalists
• Yeltsin issues decrees to counter the Emergency Committee. He got the support of some officials and civilians
• the State Emergency Committee held a live press conference that went horribly. Some members like Kryuchkov didn’t show up, others appeared drunk!
• Yeltsin’s chief of his new KGB order called up military commanders and told them to stay out of this conflict
• most generals and commanders of the army did stay out of it, which was smart of them. They knew the State Emergency Committee was doomed.
• the State Emergency Committee had control of the entire Soviet nuclear arsenal. They could’ve caused catastrophic damage if they wanted to. But on Aug 21, they ordered all troops back to barracks.
• on Aug 22, the State Committee released Gorbachev from confinement. Kryuchkov was arrested upon landing back in Russia
• Gorbachev thanks Yeltsin for securing his freedom. Yeltsin demanded the Communist party disband. Gorbachev complied.
• Gorbachev, with Yeltsin’s prodding, also affirmed the independence of Lithuania, Latvia, and Estonia
• the putsch, a movement to slow the demise of the Soviet Union, actually radically accelerated its demise

National Trees in the Union Landslide

• Although Yeltsin is viewed as the face of the Democrats in their battle against the Communists, Gorbachev definitely laid the groundwork
  • we must remember press freedom and elections were brought in by Gorbachev, despite him holding on dearly to the Communist party
  • additionally, it was Gorbachev who was hesitant to employ the USSR military, despite there being many reasons to do so
• Yeltsin didn’t intend to destroy the Union. His calling for a Russian president was not meant to replace the Soviet presidency, rather it was a way to force Gorbachev to follow his lead, i.e. the Soviet follows the lead of the Russian president
  • but now we know that the Russian presidency and institutions/legislature fatally undermined the Union.
• the Union’s demise was “National in form, opportunist in content”
  • we see this in Ukraine. In mid 1990, Kravchuk, leader of Ukraine, announced his support to remain in the Soviet Union, but there was push back within Ukraine for this - the people wanted independence. By Nov 1990, he signed an agreement with Russia that recognized his sovereignty. In 1991, Kravchuk outright rejected Gorbachev’s Union Treaty
    • so basically it was “national in form” because people wanted independence, and in an effort to remain in power, Kravchuk became an opportunist and followed the lead of popular opinion
  • we see this in Kazakhstan as well. Nazarbaev was pro-Union up until the end (along with most other Central Asian leaders). But nationalism was growing there too.
• so was nationalism the problem? Not alone.
  • the structure of the Soviet state - 15 national republics - proved fatal to the USSR
  • ‘reform’ meant giving these republics more power, but no lines were drawn. Eastern Europe was left to its own devices and given free reign basically. Russia themselves were attacking the Union too (Yeltsin).
    • in the 80s and 90s, India faced separatist movements. What did they do? Brutally put them down via killing thousands of separatists. The government issues CLEAR signs about what lines cannot be crossed. This is what kept them intact. This is what Gorbachev failed to do.
• going back to the idea of “National in form, opportunist in content”, we see this in Russia as well
  • the State Emergency Committee was not backed by all Soviet Elite, because a lot of them could tell the State Committee was going to fail. So they became opportunists and joined the Democrat side of Yeltsin
  • if you are caught in a landslide and a large tree comes into view that is solidly rooted, you will grab on to it. Some will grab on earlier than others. This is what happened in Russia. It was a landslide (USSR collapsing) and some Soviet elite could see that earlier than others and caught onto the tree (they were opportunists)

Counter-putsch

• all other republics that had not declared independence did so during or right after the putsch, except Russia who wanted to become the legal heir of the USSR
  • Yeltsin continued the hostile takeover of USSR institutions
• the USSR under Gorbachev was still trying to get a Union Treaty going. Yeltsin attended these too. Kravchuk (Ukrainian leader) did not.
  • On Dec 5 1991 Yeltsin told reporters that a Union without Ukraine is not possible
  • at this point the Union was clearly dead, but no one knew how to get rid of the Soviet president
• A Russia-Belarus meeting was held on Dec 7 which Kravchuk attended. A representative from an American NGO operating is Moscow also attended in order to clarify the difference between a commonwealth, federation, and a confederation
  • the 3 Slavic leaders worked together on the 7th and 8th (Yeltsin, Kravchuk, and Belarus leader)
  • the result of this meeting was the formation of Commonwealth of Independent States (CIS). The CIS had no common president, parliament, or citizenship, it only had a vague pledge to work on collective security. They also declared that the USSR “is ceasing to exist”
  • both Bush and Gorbachev were called and informed
• Gorbachev, on Dec 10 appealed to the military but they chose to back Yeltsin instead
• On Dec 21, another meeting took place to expand the CIS to 11 members (all except Georgia and the 3 Baltic countries). They also formally dissolved the USSR.
• On Dec 23, Gorbachev met with Yeltsin and agreed to step down as president of the USSR
• On Dec 25, the red hammer and sickle flag was lowered in favour of the red, white, and blue flag of Russia
• On Dec 27, Yeltsin and 2 associates celebrated in Gorbachev’s former office with a bottle of whiskey at 8:30am
• overall, Yeltsin’s spiteful nature and Gorbachev’s vain nature prevented the two from working together to save some form of the Union, yet their natures also helped defang a dangerous police state and prevent all-out war
• one of the most important points about all these events was Gorbachev’s refusal to invoke martial law, despite having every reason to do so.
  • he was shocked that his reforms were leading to the system’s collapse, but despite that he went along with it
  • when looking back at it, he presents this choice as an activist strategy
• when looking at Yugoslavia’s bloody breakup, we must be grateful that the collapse of the USSR in Russia, Eastern Europe, and north Eurasia did not also produce a bloody catastrophe

Chapter 5: Survival and Cannibalism in the Rust Belt

“I think” says Ivan to Volodya, “that we have the richest country in the world.” “Why?” asks Volodya. “Because for nearly sixty years everyone has been stealing from the state and still there is something left to steal.” - Hendrick Smith, The Russians - p. 113

• the Soviet elite, especially near the end, were ‘stealing’ state property
  • they were signing over state-owned dachas to themselves, taking vehicles, etc
  • they were also opening private businesses, something that contradicts their own ideology
• once the turn to market became state policy in Russia, the seizure of state-owned wealth increased drastically
• it wasn’t just the top 1% elite, it was everyone. The subordinates of the elite, and their subordinates, and their subordinates, etc
  • even factory managers would steal profits from “their” own factories
• the Communist Party no longer existed to enforce control on people
• the decade of the 90s was shaped by all this. Nothing showed the bankruptcy of the USSR more than the bankruptcy of post-Soviet Russia

The Illusions of Reform…

• Russia took on all the foreign debt the Soviets had. They agreed to take this on in exchange for a seat at the UN Security Council. There was $50+ billion in debt
• Russian industry was collapsing. The economy declined 17% every year in the first three quarters of the 90s
  • in the worst year of the US Great Depression, the largest drop was 9%
• inflation by the end of 1991 was 250%
• Russia was trying to transition from the planned economy to the market
• some things remained regulated, like price of milk and bread, in order to protect the population
• in Jan 1992, Russian ended Soviet-era ‘planned economy’ and private trade became legal. Overnight the country was turned into a bazaar of buyers ad sellers
• the economy was not doing well
  • President Yeltsin toured the country with millions of rubles, handing it out to the people, as if he were a Czar
  • the ruble become worthless
• the Soviet central bank was replaced by 15 republic banks, but only the Russian bank could print rubles
  • that said, all the banks could issue credits in rubles
  • it was as if “Russia had 14 ex-wives each with a duplicate of the Kremlin Visa Card” - p. 121
  • these 14 republics were not inside Russia, rather they were the former Soviet states (Ukraine, etc)
• private corporations were issuing themselves free money, increasing their debt, and then asking the Russian government for subsidies
• the reformists were under fire - they were blamed for everything happening in Russia (when in actuality, the system was already collapsing under the Soviets)
  • some accused the US of playing a part in this to strangle Russian industry
• in 1993, Russia cut all the central banks from issuing ruble credits and replaced the Soviet ruble with the Russian ruble. They also adopted a more strict monetary policy.
• Russia achieved gradual monetary stabilization, with inflation dropping over the next few years until it hit near zero in 1996

… and the Realities of Marketeering

• in the 80s, the USSR began to give some enterprises and individuals the permission to participate in foreign trade, something that has always been a state-controlled venture
  • major condition: profits you make from export must be used to import short-supplied goods
  • these Soviet exporters did not follow the condition and instead stashed their profits away in off-shore banks and shell companies
• when the USSR collapsed, Russia faced the same problems of having goods in short supply due to lack of imports
  • they were not granting export licenses that often
• what was the problem? Russian officials used their public office positions to pursue their own private interests
  • these officials would get paid to create official documents for whoever was willing to pay
  • often, these officials themselves setup private companies and issued themselves export licenses
• companies who were denied exporting certain things, would export them anyways and bribe the customer inspectors
• there was an “offshore” loophole area inside Russia! The Republic of Ingushetia
  • companies registered here could avoid the Russian tax authorities
  • the NSF (National Sport Foundation) raked in $1.8 billion in imported tobacco and spirits
  • many more “charities” did the same
• besides corruption among officials, there was corruption in the streets too
  • former Soviet-era convicts, KGB officers, etc, formed private security forces or extortion rackets (often the same thing)
  • in 1994 alone, 600 businessmen, journalists, and politicians were murdered
• a lot of foreign trade was done on a small scale - individuals going abroad and coming back with a suit case full of stuff
  • these individuals struggled to avoid taxes or penalties
• basically, this system was one where everyone was corrupt and violating the law, but only the smallest and weakest were targeted
• what Russia needed was better government regulation and deeper economic liberalization
  • still at this point, some prices were determined by the state, like gas. Exporting was still difficult. Lots of things needed improvement

The Ambiguities of Property…

• in addition to monetary stabilization and partial price liberalization, the other lever for transition away from Soviet Socialism was privatization
• privatization was put into law in 1992.
  • in 1991, before the Union fell, Yeltsin was denouncing the self-privatization by the factory managers all over the country
• the government held auctions to sell off state owned lands and institutions
• foreign investors were prohibited from purchasing, in fear of selling of Russia’s patrimony
  • allowing foreign investment might have been a good idea though because in 1991 Fiat had offered $2billiontopurchaseAvtoVAZcarmaker,whereasjustafewyearslaterduringthesellingofstatecompanies,itwassoldfor$45 million to Russians
• overall, Russian state property was sold off for incredibly low prices, but at least this make privatization an irreversible political reality - there was no going back now
• 1995-1998 had a second phase of privatization, that of strategic industries that were still state-owned, like natural resources
• private banks offered to sell loans to the Russian government in exchange for putting up shares in these natural resource companies
  • if the government failed to repay (which they always did), they’d put up their shares for auction
  • these auctions were managed by the various private banks, and behind closed doors they divided up the shares amongst themselves
  • furthermore, these banks bought these loans with government money! They were responsible for managing government funds by collecting taxes, etc, but they pocketed the money themselves
• this “loans for shares” won Yeltsin support with the business elite, but discredited privatization
• another problem with privatization was that it many cases it was irrelevant.
  • Many businessmen, when they got managerial control over state-owned corporations, simply paid large amounts of money to private companies for some service. These private companies were often owned by the managers at these state-owned companies!
    • even managers at private companies did the same
  • another trick was that these managers would sell the firm’s products to themselves (their own companies) in the guise of a middleman firm, and retail the products at substantial profit

… and the Barter of the Bankrupt

• privatization was not just an end in itself, it was also a means to end, that end being economic renewal
• in 1997, survey of Russian industry showed that there was still substantial passive state ownership throughout the economy, barely any outside influence, and barely any restructuring
• even though via ‘loans for shares’ privatized companies did get outside management, it did not lead to new investments or restructuring, instead revenue was siphoned away and into the pockets and businesses of the owners and managers
• the economic output of Russia in the 90s was hard to measure because many companies did not report accurate numbers in order to avoid taxes
  • GDP dropped 40%, yet electricity consumption barely dropped. If that many businesses truly went defunct, wouldn’t electricity also drastically drop?
  • unemployment was about 12-20%, which still doesn’t match the 40% GDP decrease
  • overall pretty safe to say the numbers were underreported
• most companies were not even profitable, they operated at a loss yet somehow stayed afloat
• Soviet-era industry dominated Russian employment, but major shifts included:
  • 2/3 of the GDP were in private hands
  • military share decreased from 20% to 5% (1998)
  • energy sector increased from 11% to 32%
• Russia had an export-dominated economy of raw materials
• Russia’s gas sector, partially privatized, provided 1/5th of the federal budget revenues in the 90s
• Russia still lived off their oil and gas sector, thus discouraging them from economic restructuring, one that was badly needed if they wanted to move forward
• the banking system was also broken. People’s savings would just disappear - a result of money laundering
• foreign investments were negligible, even smaller than the amount going to the tiny country of Hungary
• some blame the US for not implementing a “Marshall Plan” for post-Soviet Russia. This is short-sighted
  • first of all, if you want to fund Russia, which Russians? All the elite and politicians were working for themselves
  • secondly, Russia’s own government failed miserably to direct investments towards useful causes, instead money was being wasted
  • thirdly, the Russian Central Bank was shady - they speculated against the ruble, they hid money in offshore accounts, etc
  • fourthly, the aid Russia was getting was literally disappearing in thin air (corruption, money laundering, etc)
• so what was the real problem with the Russian economy?
  • it wasn’t the policy. It wasn’t the fake auctions. It wasn’t the controlled energy prices. It wasn’t foreign trade scams. Sure, all these things were bad, but there was an underlying issue: Soviet bequeathal
• the Soviets left behind two things:
  1. a socioeconomic landscape dominated by companies that consumed labor, energy, and raw materials with no regard for cost or output quality
  2. state officials whose theft helped prop up the Soviet system

Chapter 6: Democracy without Liberalism?

• Democracy came into Russia on top of the debris of the Soviet Union’s anti-liberal state, which is the institutional twin of the industrial planned economy
• liberalism = a legal order geared to the defense of private property and the civic rights of those recognized as citizens
  • democratically elected officials often behave like dictators unless they are constrained by a liberal order, meaning the rule of law
  • a liberal order involves a powerful parliament that issues laws, an authoritative judiciary to interpret those laws and implement them in court, and generally consistent implementation of laws and rules by the civil service
  • a liberal order means a representative government and an effective one
• the Soviet Union had executive power that trumped the legal system, which is quite anti-liberal
  • in other words, the Soviet Union was governed by men, not laws
  • this executive branch was very large in the USSR
• in post-Soviet Russia, state officials pursued private gain to a greater degree, thus causing the commitment to the public good that had existed in the Soviet Union to erode over time, causing demoralization in society
• post Soviet Russia adopted this executive branch to a certain degree, thus causing a dilemma
  • how was the incoherent Russian state going to solve the country’s problems when the state was the main problem?

Lame Presidentialism

• in 1989, Gorbachev introduced a legislature into the USSR
  • it was a 2-tiered structure: Congress of People’s Deputies, and a “working parliament” the Supreme Soviet (selected from congress)
• In March 1990 Gorbachev created a Soviet Presidency. The government reported to the president and the legislature. The legislature granted the president extraordinary powers
• later, Gorbachev remade the government (council of ministers) based on a US mode, into a cabinet directly subordinated to the presidency
• Gorbachev did not have any substitute for the cohesion once provided by Communist ideology and party “discipline”
• the Soviet state had a president, a government that was made redundant by the presidency, and a parliament whose members were frustrated at their decreasing ability to direct the president or government
• Boris Yeltsin copied these institutions, including the illogical 2-tier model of “Congress of People’s Deputies” and a separate working parliament
• Boris as president was in constant conflict with the parliament
  • Boris wanted to override the Soviet-era constitution, while the parliament wanted to defend it
  • Boris wanted to create market liberalization while the parliament passed laws to increase industrial subsidies
  • Boris, in Sep 1993 issued an illegal decree disbanding the 2-tier system
• this illegal decree eventually turned into an armed uprising resulting in the presidential bombing and storming of parliament building
• eventually Boris got his way. The new constitution modified the legislature to have a lower house (State Dumma) that was popularly elected, and an upper house (Federal Council) filled by regional officials.
  • this new constitution also gave the president nearly unrestricted powers to issue decrees with the force of law
• Russia’s president did not govern, rather he was (like the tsar) a separate branch of government who “ruled” over those who did the governing (parliament)

Eighty-nine Fiefs

• The Russian Republic was a federation consisting of 89 sub-units, 32 of them nationally designated territories
• these internal nation-state structures existed for a unconcentrated minority groups
• despite this, Russia was still 4/5ths Russian, it was more ethnically homogenous than Spain or UK
• Russia was a unique case in the Soviet Union. It had “autonomous republics” for their minorities, yet the large Russian minority populations in Kazakhstan or Ukraine did not have this
• as the Union starting breaking up, Russian’s own internal republics started to prioritize their own laws over federal ones. Slowly, that turned into calls of independence, namely from Chechnya and Tatarstan
• in Dec 1994, the Russian army launched an assault on Chechnya, with it ending in 1996 in a stalemate, leaving the status of Chechnya unresolved
  • the war resumed in 1999
• Tatarstan in 1994 signed a bilateral deal with Moscow, renouncing their independence in return for autonomy and budgetary concessions from Moscow
• in all internal republics, presidential system and administration were created
  • soon Russia had 22 presidents, including the federal one!
• in regular provinces, local politicians rose to power and an ‘aggrandizement’ took place in the local administration. Spoils of office were divided up amongst the elite.
• in other words, the fall of USSR led to the birth of 89 disconnected fiefs
  • Moscow’s relations with these fiefs/regions were regulated by bilateral “treaties”, many of which contradicted the federal constitution
• many republic presidents used their positions of power to confiscate revenue generating businesses, subsidize friendly media while punishing hostile ones, blocked candidate registration (to ensure they get re-elected), etc
• when Putin took office, he began a system of centrality.
  • Regional leaders were selected by Moscow, which did reduce the outlandish behaviour previously conducted by the local politicians in the various provinces and republics

Toward the Rule of Law?

• The Russian KGB was basically entirely the same as the Soviet KGB. Meaning, as the USSR was being dissolved and Russia launched their own KGB in May 1991, it started off with 20 people. Then when the USSR was dissolved, it grew to 20k people and hundreds of offices. EVERYTHING was adopted from the Soviet KGB.
• the new Russian KGB didn’t spend time going after ideological nonconformists, because that wasn’t a thing anymore. Instead, they went after terrorist operations, clandestine surveillance on state elite, and collected damaging information on businessmen and politicians
• Yeltsin formed PSS (Presidential Security Service), his own mini-KGB outside of the directorate of the KGB in order to spy on his own government and staff
• Many KGB officers joined private firms setup by other politicians, businessmen, and criminal groups
  • some of them remained employed at the real KGB as well
  • a lot of these organization and officers sold their services at a price. Example, selling eavesdropped transcripts of rival politicians to the highest bidder
• legal reforms began in 1989, during Soviet times. Things that were implemented were presumption of innocence, a defendant’s right to an attorney, and introduction of jury trials
• in 1993, the constitution gave the president the power to nominate judges to high courts and to appoint all federal judges
  • the issue was that ‘federal’ was an unclear term. According to Yeltsin, it meant all courts in the Russian Federation. But regional leaders continued to appoint their own local judges and sometimes even restructured the judiciary in their regions
  • Yeltsin’s plan to create inter-regional federal courts went unrealized
  • this only exacerbated the problem of Russia’s disunity in the legal space
• no one took the law seriously. Constitutional court rulings in Moscow barely were enforced outside Moscow, or event inside for that matter.
• decrees on combating organized crime gave security officials disproportionate powers of search and seizure that undermined the protection of rights and liberty

Institutional Kasha

• the Soviet Union didn’t truly collapse. Soviet-era institutions flourished in post-Soviet Russia
  • there was no mass emigration or demolition of office buildings. It was all adopted in post-Soviet Russia
• critics of Russia’s reform claimed they were copying the west. That’s not true. Russia had its own unique reform. Like stated above, it adopted so many Soviet-era institutions and practices.
• Russia in the early days was democratic but not liberal
  • it had a president who was all-powerful by constitution, but with limited effective power. Russia had 20 presidents!
  • it had a federation without federal buildings in the regions
  • it had regional executives/strong-men sitting in the upper house of the federal legislature (they were kicked out in 2000 by Putin)
  • it had a grossly oversized KGB and grossly undersized judicial system
  • corruption ran rampant in the university systems (bribery). Admission based on money rather than merit
  • corruption ran rampant in politics. The politicians who were most against it were often the most corrupt themselves
  • Russian media who bought and paid for
• at the same time, Russia was doing better than some other post-Soviet states in some regards
  • elections had integrity, unlike in places like Belarus or Central Asia
• simply speaking, Russian society was not civil. This is because it was not a liberal state
  • civil society and liberal state are not opposites, rather they are sine qua non, meaning without one, the other cannot exist
• Russia’s problem was not cultural or economic, but institutional. It was a problem of governability and governing institutions.
  • many countries experienced the same problem in those times
  • Afghanistan comes to my mind

Chapter 7: Idealism and Treason

• the crucial reasons for the USSR collapse were largely due to the aftermath of WW2 and victory over fascism:
  • post-war economic capitalist boom
  • consumer revolution
  • massive investments in social welfare (the birth of the welfare state)
  • decolonization
• these shifts in international politics meant the USSR could not provide a better standard of living, a safer safety net, a just society, or a superior political order, than than of the capitalistic welfare state west.
• but it was the USSR who lost 20 million to defeat the Nazis. And it was the USSR that ‘scared’ the west into adopting a welfare state system
• the USSR was fully stable in the 1980s. Yes it was falling behind, but was perestroika necessary?
• why didn’t the dying Soviet state call upon the army? It’s because perestroika wasn’t about defeating the enemy (the west) but rather reviving the ideals of the October revolution
• the simultaneous demist of socialism and the USSR was because capitalism was clearly winning. Censorship was the only thing keeping the USSR intact.
• what would the US have done if the USSR decided to use its war machine to hold power? Or to take the world down with it? The causes of this peaceful end to the cold war were poorly understood in Washington

Dissolved by its Own Ideals and Elite

• “reform seemed necessary, but it would be tantamount to destabilization” - p. 175
• the reformers began as “Stalinists”, Gorbachev included
• the next natural step in the reformist evolution is the realization that it is impossible to reform socialism
• many analysts predicted that a reform would destabilize the USSR, but then a system-saving crackdown (Stalinist methods) would ensue. But this clearly didn’t happen. Why?
  • because that would contradict the humanist vision of Gorbachev and the other reformers. It would’ve turned everything they worked for (the reform) into a lie
• Gorbachev and his quest for humanist socialism reform emerged out from the soul of the Soviet system
  • many critics accused him of being a Washington agent. This isn’t true.
• the October Revolution’s ideals were a world of abundance, social justice, and people’s power. These ideals are what fueled Yeltsin’s platform as well. Yeltsin came along and promised the people these ideals, except without the party and apparatchiks
• the dream of a better more just world was a dream in the Soviet socio-political landscape, which was the main reason for the USSR’s unexpected yet peaceful dissolution
  • in other words, the reformers didn’t come with something new. It was already in the Soviet system

The Armageddon That Never Was

• this is stated many times in the book, but it must be stated again: the submissive capitulation of the USSR was a historically rare and even strange event. Empires don’t usually collapse in a whimper, they usually go out guns blazing
  • in the 1990s we saw Yugoslavia break out in all-out war. The same didn’t happen in the USSR

Less “Reform” Than Ongoing Collapse

• the Soviet collapse brought along with it people in the west taking credit for it
  • the Clinton and Bush administrations both tried to take credit for it or tried to play a role in Russia’s “transition”
  • eventually they realized Russia will not become a liberal state or market economy overnight
  • blame was then shifted to the IMF (international monetary fund)
• the US and the west in general promoted Russia’s transition but never financially helped or invested. This only empowered anti-Western sentiment inside Russian and anti-Russian sentiment in the West
• so why couldn’t Russia become a liberal state? They adopted too many institutions from the USSR.
  • Additionally, the limited constraints placed on state officials in the USSR were removed, thus giving free reign to state officials during the post-Soviet era (this is mentioned earlier in the book as well)
• “reform” was blamed for post-Soviet Russia’s woes and failings. What people failed to realize was that reform wasn’t to blame, rather it was the Soviet inheritance.
• the Soviet collapse was a true collapse, not just a societal overthrow
  • throughout the 90s Soviet-era hospitals and schools were decaying or closing, power grids were aging and not being replaced, etc.
  • Russia inherited 1300 Soviet airports. Within a decade, only 250 were saved, the rest were shut down.
  • the entire military also collapsed. This is because a lot of the systems, such as air defense and radar, involved many different components working together, and all those components were scattered across different republics. Also, lack of money.
    • in 1989 USSR built 78 submarines. In 1999, Russia only built 4
  • Sweden and Turkey both suddenly had stronger navies than Russia
  • Russia inherited 186 Soviet land army divisions. By 1996, Russia had just 30, with only 10 divisions being battle ready

Whither Russia? Eurasia. But Whither the World?

• what was Russia’s place in the world? Could they join NAFTA? Or the EU? Or NATO? No.
• But Russia had it’s own version these global organization: CIS (Commonwealth of Independent States)
  • on the 10th year anniversary of the USSR collapse, the day of cheering for the Union’s collapse also provided opportunity for more sober reflections on the ties they all lost when the Union collapsed
  • but, some of these ties were now on their way to be rebuilt
  • similar to the aftermath of the British or French colonial empires, Russia was expected to maintain a position of “diplomatic and economic strength in lands it used to rule. - p. 191

Epilogue: The End of the Collapse

The Putin Years, and Beyond

• it’s undeniable Putin really fixed up the country
  • he grew the value of Russia’s stock market from $60billionto$1.3 trillion
  • the people didn’t love Putin per se, but they loved Putin’s Russia
  • most people became middle class
  • salaries were going 10% yearly
  • unemployment was decreasing
  • private property was widespread
  • Russia society was finally stable
• most middle class people worked at large government owned corporations. This was the “corporate middle class”. Medvedev, Putin’s successor in 2008, came from a legal background working at a large conglomerate
• Medvedev inherited quite the successful nation state. If he could maintain the progress Putin laid down and stand up to the west on occasion, he would no doubt be considered a hero just like Putin
  • NOTE: this book was published in 2008, which was the year Medvedev was elected
• Russia still faced a few significant problems
  • infighting between predatory economic clans who sought to devour everything in their path
  • growing state corruption
  • corporate sector gorging on ‘leverage’ or debt in a still shaky banking system
  • renewal of inflation (it dropped from 20% in 2000 to 6% in 2006, but then increased to 15% in 2008 due to election year spending, surging global process, etc)
• the greatest problem of all was, paradoxically, Russia’s success

Nothing Imposes Burdens Like Success

• in 1998, Russia devalued the ruble and defaulted on their debt. This crazy decision was actually was helped Russia resurge.
• Russia’s resurgence was a result of:
  • Putin’s fiscal restraint (saving money)
  • increase in exports due to demand of Russian goods (led by China)
• regarding trade, Russia primarily traded with the EU, but in the late 90s the Chinese were importing lots of goods including Russian goods, which drastically increased the value of Russian goods
  • Russian private firms now had the money needed to perform restructuring
• this trading book also introduced something new to Russia: a services sector
  • this was also a result of Russian consumer demands
• this economic boom overall led to an increase in foreign investments
• in summary, Russia was not living off just oil, they were also living off of China
  • in fact, the oil price hike started in 2004, which was years after Russia started to experience economic growth
• Russia’s processing industries (manufacturing, services, construction) also began to grow FASTER than their extractive ones (historically, it was always the opposite)
• the early 2000s saw a dramatic rise in college admissions. More and more people wanted to become college educated.
• the first two terms of Putin’s presidential years (2000-2008) were just “recovery mode”, and he did a damn good job at it
  • he inherited a $200billiongrossdomesticproductandgrewitto$1.7 trillion
  • taxes were reduced for people (personal income tax) as well as businesses
• Russia’s policies and goals were just around helping the country recover, but in order to become a “highly productive and innovation-driven country” that they wanted to become, they needed something that all those countries have: good governance

The Russians Are Coming

• The Russians were investing in foreign business. This was a big part of their economic policy.
• Russia in the early 2000s owned lots of companies (meaning the government/state owned them) especially in oil and gas, similar to lots of Arab nations

Market Leninism

• so was a Communist reform possible? Yes. China did it. They figured out you can enhance Communist political control while embracing a market economy (capitalism) = Market Leninism
• This can also be called Putinism because Putin also did this. He combined an open market economy that was integrated into the global economy, with an authoritarian political system
  • the question now was: could a market-economy Russia achieve a stable authoritarian regime, when the rest of the world’s richest and most powerful countries were democratic rule-of-law systems?
• it must be noted China and Russia are not that similar: China is still a communist state, they adore Lenin. Russia is the opposite (to a degree - Lenin is seen as the “failed past”)
• on the economic front, China also gave accommodations to US power, while Russian politicians refused to do that
  • this was a failure to understand geopolitics on Russia’s part: every great power that tried to go at it economically alone, or against the US, always failed out, while those who worked closely with the US tended to do well
  • Chinese elites viewed this accommodation as “learning to live with the hegemon” - p. 215
• additionally, China followed a “good neighbor policy”. Besides Taiwan, they did not involve themselves in the internal affairs of their neighbors. Instead, they acted as a great trading partner for Asian countries and even replaced the US as the primary trading partner in the region
  • on the other hand, Russia was still trying to gain influence with their former Soviet Republics! They did not follow a “good neighbor policy” at all
• Russia was the world’s second largest immigration destination (after the US). Additionally, many of their former republics relied on them:
  • 30% of Tajikistan’s GDP came from Tajik workers making money in Russia
  • 30% of Moldova’s GDP came from Moldovan workers making money in Russia
  • 20% for Kyrgyzstan, 10-20% for Georgia and Armenia, and a bunch for Ukraine too
• Russia has an upward of 500,000 migrant laborers just from Central Asia
• The problem was still a labor problem, despite all the “hands” they had available
• as Putin outlined in a speech in 2008: The Russian economy’s biggest problem today is that it is extremely ineffective. Labor productivity remains very low
  • it’s about 1/6th the level of developed countries
• A big point of contention was NATO. The expansion of NATO angers Russia, but this wasn’t the reason the US was careful when expanding NATO, rather by expanding NATO they undermine it
  • ex: Russia and Georgia had a war in 2008. The US has been pushing for Georgia to join NATO. If they had been in NATO, the US would’ve been forced to go to war with Russia. Would Americans really die for Georgians? Why should American get involved?
  • if Georgia was part of NATO and the US chose not to get involved, this would’ve been a bad look and would’ve made everyone doubt the legitimacy of NATO
• we now have 3 superpowers: Russia, China, and US
  • all three have market economies, but only US is a liberal state
  • now we just have to see if the US can handle this challenge that we can call learning to live with the autocrats

Reflections

This book is not for beginners; it assumes prior knowledge on topics like economy and politics in general. Which makes sense considering this is a book largely around the economy and politics of the USSR/Russia. Often things go unexplained that you then have to piece together on your own.