Explain how Russia moved from Soviet one-party rule and central planning to a presidential republic and market economy (1985–1999), and weigh the causes, methods and costs of the transition.
Each is in the History glossary, with every other term in the subject.
The special conference of the Soviet Communist Party in June–July 1988 at which Gorbachev won approval for contested elections and a new parliament, the Congress of People's Deputies.
The plan drawn up in 1990 by Stanislav Shatalin and Grigory Yavlinsky to move the Soviet economy to a market within 500 days; Gorbachev abandoned it for a compromise.
Gorbachev's campaign from May 1985 to cut drinking by reducing the production and sale of alcohol; it reduced deaths for a time but cost the state large tax revenues.
The article of the 1977 Soviet constitution that made the Communist Party the "leading and guiding force" of Soviet society; it was amended in March 1990, ending the party's legal monopoly.
A term for the Russian economy of the 1990s, in which business, organised crime and violence were closely linked.
The exchange of goods for other goods without money; in 1990s Russia it was widely used by enterprises to avoid taxes and make up for a shortage of cash.
The agreement of 8 December 1991 in which the leaders of Russia, Ukraine and Belarus declared that the USSR had ceased to exist and created the Commonwealth of Independent States.
Between 1985 and 1999 Russia went through two transitions at once: from the one-party communist rule of the Soviet Union to an elected presidency, and from a state-planned economy to a
With a free account, Augment remembers where you stopped and what you have practiced.
The amount by which a government's spending is greater than its revenue in a year, which must be covered by borrowing or printing money.
The loose association of former Soviet republics created in December 1991 to replace the USSR, with no common government.
The successor to the Soviet Communist Party in Russia, founded in 1993 and led by Gennady Zyuganov; the largest opposition party of the 1990s.
The ruling party of the USSR, which held a legal monopoly of power until 1990 and controlled the state, economy and society through its own hierarchy. It was banned in Russia in November 1991.
The large parliament created in the USSR in 1989, partly through contested elections, and the similar body elected in Russia in 1990, which was dissolved by Yeltsin in 1993.
Yeltsin's decree of 21 September 1993 dissolving the Congress of People's Deputies and the Supreme Soviet, which the Constitutional Court ruled unconstitutional and which led to the October crisis.
A term coined by the political scientist Guillermo O'Donnell for a system with free elections in which the elected president governs with few checks from parliament or the courts.
The name given by Gorbachev and his supporters to the late Brezhnev years (roughly 1970–1985), when Soviet economic growth slowed and the political system resisted change.
The treaties of March 1992 that set out the powers of Russia's regions and republics; Chechnya and Tatarstan refused to sign.
The head of the Communist Party of the Soviet Union and, in practice, the most powerful person in the USSR.
Rule by old people; critics used the word for the ageing circle around Porfirio Díaz in Mexico by 1910 and for the Soviet leadership of the late 1970s and early 1980s, when several elderly and ill leaders died in office.
The Russian government's short-term rouble bonds, issued from 1993 at high interest rates; the government defaulted on them in August 1998.
"Openness": Gorbachev's policy, from 1986, of allowing more open discussion of the USSR's problems and past in the media and public life.
The Soviet state planning agency, which set production targets, prices and supplies for enterprises across the economy.
Extremely rapid inflation in which prices rise so fast that money becomes almost worthless, as in Germany in 1923.
The international organisation, founded in 1944, that lends to countries with balance-of-payments problems, usually on condition that they carry out economic reforms.
A business owned jointly by two or more partners; in the USSR from 1987, a company formed by a Soviet enterprise and a foreign firm.
The agreement of 31 August 1996 that ended the First Chechen War, providing for the withdrawal of Russian forces and postponing a decision on Chechnya's status to 2001.
"Roof": in 1990s Russia, a protection arrangement in which a criminal gang, security firm or corrupt officials protected a business and enforced its contracts in return for payment.
The Soviet law of May 1988 that allowed cooperatives, in effect private businesses, in most sectors of the economy.
The Soviet law of June 1987 (in force from 1988) that gave enterprise managers control over wages, output and profits once state orders were met.
The nationalist party led by Vladimir Zhirinovsky, which won the largest share of the party-list vote in the Duma elections of December 1993.
"The wild (or dashing) nineties": the Russian name for the 1990s, remembered by many Russians as a time of poverty, crime and disorder.
The scheme of 1995–1996 in which private banks lent money to the Russian government against its shares in major companies, then acquired those companies cheaply when the loans were not repaid.
An economy in which most enterprises are privately owned and prices, wages and output are set mainly by supply and demand rather than by the state.
A Russian investment company run as a pyramid scheme, which attracted millions of small investors before collapsing in July 1994.
The gap between the money people hold and the goods available to buy at fixed prices; in the late USSR it showed itself in empty shops and queues rather than rising prices.
Gorbachev's approach to foreign policy, which held that security had to be achieved jointly with the West and that every country had the right to choose its own system.
The list of important posts in the Soviet state, economy and society that could be filled only with Communist Party approval, and the privileged class of officials who held them.
In 1990s Russia, one of the small group of businessmen who made vast fortunes through banking, privatisation and natural resources and used their wealth and media to influence the government.
The wave of declarations of sovereignty by Soviet republics, and by autonomous republics inside Russia, in 1990–1991, each claiming that its laws and resources took priority over those of the centre.
"Restructuring": Gorbachev's programme, from 1987, to reform the Soviet economy and later the political system, giving enterprises more freedom and allowing limited private business while keeping socialism.
An economy in which the state owns most enterprises and decides what is produced, in what quantities and at what prices, instead of leaving these decisions to the market.
The small committee of senior leaders at the top of a communist party; in the USSR it decided policy and was headed by the General Secretary.
A political style that claims to speak for ordinary people against a corrupt or privileged elite.
The transfer of enterprises or other property from state ownership to private owners.
The blockades of the Trans-Siberian and other railways by Russian coal miners in May 1998, in protest at unpaid wages.
"The rule of the seven bankers": a Russian term for the political influence of a handful of oligarchs in the mid-1990s.
A strategy for moving from a planned to a market economy all at once: freeing prices and trade, cutting state spending and privatising state property quickly.
The name given in October 1989 by a Soviet spokesman to Gorbachev's policy of letting the countries of Eastern Europe choose their own path, after Frank Sinatra's song "My Way".
The independent trade union and opposition movement founded in Poland in 1980, which won the semi-free elections of June 1989.
The group of eight senior Soviet officials who tried to seize power from Gorbachev in the coup of 19–21 August 1991.
A system of government in which the elected president has far greater powers than the legislature and courts, including wide powers to rule by decree and dissolve parliament.
The treaty negotiated in 1990–1991 to turn the USSR into a looser federation of sovereign republics; the August 1991 coup was launched to stop its signature.
"Acceleration": Gorbachev's first economic policy (1985–1986), which tried to speed up growth through more investment and stricter discipline within the existing planned economy.
A tax on the value added at each stage of production and sale of goods and services; Russia introduced it in 1992.
The peaceful revolution of November–December 1989 that ended communist rule in Czechoslovakia.
The first stage of Russian privatisation (1992–1994), in which every citizen was offered a voucher worth 10,000 roubles that could be exchanged for shares in state enterprises.
The military alliance of the USSR and the communist states of Eastern Europe, founded in 1955 and dissolved in July 1991.
The timeline of 1985–1999 shows the two phases of the transition. In the first, Gorbachev tried to reform the Soviet system from within and lost control of the process. In the second, Yeltsin used the collapse of the Soviet state to build a new Russian state and a market economy, through a series of crises that he survived but did not resolve.
The transition had deep roots in the way the Soviet Union was governed and in the failure of its economy to keep pace with the West. It became possible because a new leader decided that the system had to change, and it became unstoppable when the countries of Eastern Europe threw off communist rule in 1989.
The Union of Soviet Socialist Republics (USSR) was a federation of fifteen union republics, of which the Russian Soviet Federative Socialist Republic (RSFSR) was by far the largest, with about half the population and three-quarters of the territory. Real power in every republic lay with one organisation, the Communist Party of the Soviet Union (CPSU). The 1977 constitution gave this monopoly a legal basis in its Article 6.
The leading and guiding force of the Soviet society and the nucleus of its political system, of all state organisations and public organisations, is the Communist Party of the Soviet Union. The CPSU exists for the people and serves the people.
Constitution of the USSR, Article 6, adopted 7 October 1977. As a source, the article shows how the party presented its rule: as leadership on behalf of the people, written into the basic law of the state. Its value for historians lies in what it made official, since any challenge to the party’s monopoly after 1985 had to begin with a challenge to Article 6.
The party ran the state through its own hierarchy. The Politburo, a committee of about a dozen senior leaders headed by the General Secretary, decided policy. The Central Committee and its Secretariat supervised every ministry, region and factory. The government (the Council of Ministers and the state planning agency, Gosplan) and the elected Supreme Soviet carried out decisions taken in the party.
The nomenklatura system gave the party control of every important appointment in the country. It also created a privileged elite of perhaps several hundred thousand officials, with access to special shops, housing, holidays and cars. Corruption was widespread, most notably in Central Asia, where the cotton scandal of the 1980s exposed the falsification of harvest figures over many years.
The chart of Soviet power in 1985 shows why change had to come from the top. There was no legal opposition, no free press and no institution outside the party through which the system could be criticised or reformed, so any reform depended on the party leadership deciding to carry it out.
By the early 1980s the Soviet Union was led by old and ill men, a situation critics called a gerontocracy. Leonid Brezhnev, General Secretary since 1964, died in November 1982 aged 75. His successor, the former KGB chief Yuri Andropov, began a campaign against corruption and poor labour discipline but died in February 1984. Konstantin Chernenko, already seriously ill when chosen, died in March 1985 after thirteen months in office.
On 11 March 1985 the Politburo chose Mikhail Gorbachev, aged 54, as General Secretary. Gorbachev was the son of a peasant family from Stavropol in southern Russia, a law graduate of Moscow State University and the Politburo member responsible for agriculture. He had the support of Andropov’s allies and of the veteran foreign minister Andrei Gromyko. Most of the leadership expected an energetic manager who would make the system work better, not a leader who would change it.
Gorbachev’s first step was to replace the old guard. By 1987 much of the Politburo and many regional party secretaries had been replaced. Reformers such as Alexander Yakovlev (propaganda) and Eduard Shevardnadze (foreign affairs) were promoted, and Boris Yeltsin, a blunt party boss from Sverdlovsk in the Urals, was brought to Moscow in 1985 and made head of the Moscow city party organisation.
New faces did not produce results, and Gorbachev came to see the party itself as the main obstacle. At the Central Committee plenum of January 1987 he blamed the leadership of the Brezhnev years for the country’s problems and called for “democratisation” inside the party and in society. At the 19th Party Conference (June–July 1988) he won approval for a new parliament, the Congress of People’s Deputies, two-thirds of whose 2,250 members would be elected in constituencies, many of them with a choice of candidates, while the other third was chosen by organisations such as the party, the trade unions and the Academy of Sciences.
The elections of March 1989 were the first contested national elections since 1917. Several regional party leaders lost even when they stood unopposed, because voters crossed out their names. Yeltsin, who had been dismissed as Moscow party chief in November 1987 after criticising the slow pace of reform, won about 89 per cent of the vote in Moscow. The Congress’s sessions in May–June 1989 were shown live on television, and millions watched deputies such as the physicist and dissident Andrei Sakharov attack the party and the KGB openly.
The party split into hostile camps. Conservatives, led in the Politburo by Yegor Ligachev, believed that reform was destroying socialism. In March 1988 the newspaper Sovetskaya Rossiya published a long letter by Nina Andreyeva, a Leningrad chemistry lecturer, defending Stalin’s record and attacking the reformers; for three weeks it was treated as a signal of a change of line until Pravda published a rebuttal approved by Gorbachev. Radicals, with Yeltsin as their best-known figure, argued that Gorbachev was moving too slowly.
Under pressure from mass demonstrations and from the new parliament, Gorbachev agreed in February 1990 to give up the party’s monopoly. On 14 March 1990 the Congress amended Article 6, and the next day it elected Gorbachev to a new post, President of the USSR. The change was meant to give him a power base outside the party. In practice it left him dependent on a party whose authority was draining away and a parliament he could not control. In July 1990 Yeltsin resigned from the party in front of the television cameras at its 28th Congress.
The Soviet Union had a planned economy: Gosplan set output targets for every enterprise, the state fixed prices and wages, and almost all property belonged to the state. This system had industrialised the country under Stalin and rebuilt it after 1945, and in the 1950s and 1960s output grew fast. From the 1970s growth slowed sharply. Official Soviet figures still claimed respectable growth, but CIA and later Russian estimates suggest that by the early 1980s the economy was growing at about 2 per cent a year or less, and some economists argue that output per head had stopped growing at all. The era of stagnation had several causes.
Exhausted sources of growth. Soviet growth had come from adding more workers, capital and raw materials. By the 1970s there were few new workers to draw from the countryside, and new oil and coal had to be extracted from remote Siberia at rising cost.
Technological lag. Planners rewarded quantity, not quality or innovation. Outside the defence sector, Soviet industry fell behind the West in computers, electronics and consumer goods.
Agriculture. Collective and state farms were inefficient, and the USSR became a large importer of grain from the West, paid for with oil and gas.
The defence burden. Western estimates of Soviet military spending range from about 15 to 25 per cent of national output, several times the share in the USA. The war in Afghanistan (1979–1989) added to the cost and killed about 15,000 Soviet soldiers.
Dependence on oil. High world oil prices in the 1970s hid the weakness of the economy. When prices fell by more than half in 1985–1986, the state lost much of its hard-currency income just as Gorbachev began his reforms.
Daily life showed the effects. Queues and shortages of meat, consumer goods and housing were normal; corruption and the black market grew; alcoholism and male mortality rose. Many Soviet citizens no longer believed official propaganda, a cynicism summed up in the workers’ saying, “they pretend to pay us, and we pretend to work”.
Gorbachev’s first economic policy, announced at the Central Committee plenum of April 1985, was uskorenie (acceleration): more investment in machine-building and stricter labour discipline, within the existing planned system. In May 1985 he began an anti-alcohol campaign that cut vodka production, closed shops and raised prices. Alcohol consumption and deaths fell for a time, but the campaign cost the state budget billions of roubles in lost tax revenue, drove drinking into illegal home-brewing and made Gorbachev unpopular.
The explosion at the Chernobyl nuclear power station in Soviet Ukraine on 26 April 1986 exposed the costs of secrecy. Officials delayed telling the population of the danger, and Gorbachev made his first public statement eighteen days later, on 14 May. The disaster convinced him that the system’s habit of hiding bad news was itself dangerous, and it strengthened his policy of glasnost.
Glasnost went much further than Gorbachev had intended. By 1987–1989 newspapers and magazines such as Ogonyok and Moscow News were publishing material on Stalin’s crimes, the Gulag, the 1932–1933 famine, the secret protocol of the Nazi–Soviet Pact of 1939 (which had handed the Baltic states to Stalin) and the privileges of the nomenklatura. These revelations destroyed much of the party’s claim to legitimacy and gave national movements in the republics evidence for their grievances.
The timeline of Gorbachev’s reforms shows how each phase led to the next. When acceleration within the old system failed, Gorbachev moved to restructure the economy; when restructuring met resistance from officials, he turned to democratisation to put pressure on them from below.
Perestroika was introduced through a series of laws:
Measure | Date | What it did | Result |
|---|---|---|---|
Law on Individual Labour Activity | November 1986 | Allowed small-scale private work by individuals and families (taxi driving, repairs, tutoring) | Little effect; heavily taxed and regulated |
Joint ventures with foreign firms | January 1987 | Allowed Soviet enterprises to form companies with foreign partners | Brought in some foreign capital and know-how; small in scale |
Law on State Enterprise | June 1987 (in force January 1988) | Gave managers control over wages, output and profits once state orders were met; workers could elect managers | Wages rose faster than output; supplies broke down |
Law on Cooperatives | May 1988 | Allowed cooperatives, in effect private businesses, in most sectors, including banking and trade | Several million people worked in cooperatives by 1990; early private fortunes; public anger at “speculators” |
The reforms damaged the economy because they were half-measures. Enterprises gained freedom, but prices were still fixed by the state, so the easiest way to raise profits and wages was to stop making cheap goods and raise pay. The old planning system was weakened before markets existed to replace it. Many cooperatives were attached to state enterprises and bought goods at fixed state prices to resell them at market prices.
The chain of causation from the Law on State Enterprise shows how the reforms fed shortages. Cash incomes rose while the supply of goods stagnated, so the gap between the money people held and what they could buy (the money overhang) widened. The state also lost revenue from alcohol and oil and kept subsidising food prices, so its budget deficit rose to somewhere between 8 and 10 per cent of national output by 1988–1989 (estimates vary), financed by printing money. By 1989–1990 rationing coupons had returned for sugar, meat and soap in many cities, and shelves were empty even in Moscow.
In July 1989 coal miners in the Kuzbass in western Siberia and the Donbas in Ukraine went on strike, at first over shortages of soap, food and other basic goods, then over pay, housing and conditions. Several hundred thousand miners took part, in the largest wave of strikes the Soviet Union had seen for decades. The government settled by promising more supplies and more independence for the mines, which it could not afford.
Our strike broke out spontaneously, though a lot of problems had accumulated and they were sure to result in something. … This is the very thing that Mikhail Gorbachev means when he says that they should implement perestroika from above and we should do it from below. It’s a shame to live so poorly …
Valery Samofalov, chair of the strike committee at the Kuibyshev mine in Donetsk, interviewed on 2 August 1989, in Lewis Siegelbaum and Daniel Walkowitz (eds), Workers of the Donbass Speak (1995). The interview was given to American historians days after the strike, when its leaders still saw themselves as Gorbachev’s allies against local officials. It shows that the strike began as a protest about living standards, presented in the language of perestroika; within two years the same miners’ committees were demanding Gorbachev’s resignation.
In 1990 a group of economists led by Stanislav Shatalin and Grigory Yavlinsky drew up the 500 Days programme, a plan to move to a market economy in 500 days through privatisation, free prices and a transfer of economic powers to the republics. Yeltsin backed it. Gorbachev first supported it, then in September–October 1990 abandoned it for a vaguer compromise, fearing that it would hand power to the republics and alienate the conservatives in the army, the KGB and the party.
From late 1990 Gorbachev moved to the right, appointing hardliners such as Valentin Pavlov (Prime Minister from January 1991) and Boris Pugo (Interior Minister). Pavlov’s government withdrew large banknotes from circulation in January 1991 and roughly doubled or tripled many state retail prices in April 1991, which hit living standards without creating a market. By 1991 national output was falling, inflation was rising quickly, and republics and regions were keeping taxes and goods for themselves.
Gorbachev’s domestic reforms needed a calmer international climate and lower defence spending. His new thinking in foreign policy held that security could be achieved only jointly with the West, that nuclear war could not be won, and that every country had the right to choose its own system. He met the US President Ronald Reagan at four summits, and the Intermediate-Range Nuclear Forces (INF) Treaty of December 1987 abolished a whole class of nuclear missiles. Soviet troops left Afghanistan by February 1989.
The key change for Eastern Europe came in Gorbachev’s speech to the United Nations General Assembly on 7 December 1988.
Freedom of choice is a universal principle to which there should be no exceptions. … Today I can inform you of the following: The Soviet Union has made a decision on reducing its armed forces. In the next two years, their numerical strength will be reduced by 500,000 persons, and the volume of conventional arms will also be cut considerably. These reductions will be made on a unilateral basis …
Mikhail Gorbachev, speech to the UN General Assembly, New York, 7 December 1988 (English translation). Gorbachev was speaking to a world audience, and to Western governments in particular, whose trust and credit he needed. The speech is valuable evidence of Soviet intentions because it combined a statement of principle with a concrete, checkable commitment to cut troops, including six tank divisions to be withdrawn from East Germany, Czechoslovakia and Hungary.
Gorbachev’s statement meant that the Brezhnev Doctrine no longer applied. On 25 October 1989 the Soviet Foreign Ministry spokesman Gennadi Gerasimov told reporters that Moscow now followed “the Frank Sinatra doctrine”, after the song “My Way”, under which each country decided on its own which road to take. The Sinatra Doctrine described a policy already in force: by then Poland had a non-communist prime minister and Hungary had opened its border with Austria.
Without the threat of Soviet tanks, the communist regimes of Eastern Europe fell within a few months. In Poland the trade union Solidarity won almost every seat it was allowed to contest in the semi-free elections of June 1989, and Tadeusz Mazowiecki became the first non-communist prime minister in the Soviet bloc in August. Hungary’s communists negotiated an end to one-party rule. In East Germany, mass demonstrations and the flight of thousands of citizens through Hungary led the regime to open the Berlin Wall on 9 November 1989. Communist rule ended peacefully in Czechoslovakia (the Velvet Revolution) and Bulgaria, and violently in Romania, where Nicolae Ceaușescu was overthrown and executed on 25 December 1989.
Germany was reunified on 3 October 1990 within NATO, which Gorbachev accepted in return for West German loans and promises about troop levels. The Warsaw Pact, the Soviet-led military alliance of Eastern Europe, was dissolved in July 1991. For Soviet conservatives these events were a humiliating defeat that had thrown away the gains of the Second World War; for reformers and nationalists inside the USSR they showed that communist rule could be ended peacefully.
The vertical timeline of 1988–1991 shows how the example of Eastern Europe spread into the Soviet Union itself. The Soviet Union contained more than a hundred nationalities, and glasnost allowed long-suppressed grievances to be voiced: Russification, environmental damage, and the memory of deportations and famine. The first open challenges came in the three Baltic republics (Estonia, Latvia and Lithuania), which had been independent states until their annexation by Stalin in 1940.
On 23 August 1989, the fiftieth anniversary of the Nazi–Soviet Pact, about two million people formed a human chain, the Baltic Way, across the three republics.
Lithuania declared its independence on 11 March 1990. Gorbachev answered with an economic blockade, and in January 1991 Soviet troops seized the television centre in Vilnius, killing fourteen civilians.
Armed conflict broke out between Armenia and Azerbaijan over Nagorno-Karabakh from 1988, and Soviet troops killed protesters in Tbilisi, Georgia (April 1989) and Baku, Azerbaijan (January 1990).
The most important challenge came from Russia itself. In May 1990 the newly elected Congress of People’s Deputies of the RSFSR chose Yeltsin as Chairman of its Supreme Soviet, by a narrow margin and against Gorbachev’s wishes. On 12 June 1990 the Congress adopted a declaration of state sovereignty.
The First Congress of People’s Deputies of the RSFSR … solemnly proclaims the State sovereignty of the Russian Soviet Federated Socialist Republic throughout all of its territory and declares its resolve to create a democratic rule-of-law State within a renewed USSR. … In order to ensure the political, economic, and legal guarantees of the sovereignty of the RSFSR there shall be established: … the supremacy of the RSFSR Constitution and laws of the RSFSR throughout the territory of the RSFSR; the effect of acts of the USSR which are contrary to the sovereign rights of the RSFSR shall be suspended by the Republic on its territory.
First Congress of People’s Deputies of the RSFSR, Declaration on the State Sovereignty of the RSFSR, 12 June 1990 (translated from the Russian text held in the State Archive of the Russian Federation). The declaration still spoke of a “renewed USSR”, so it was not a declaration of independence. Its significance lay in the claim that Russian law stood above Soviet law, which gave Yeltsin a legal and political base from which to challenge Gorbachev and the central government.
The parade of sovereignties that followed (Ukraine in July 1990, then almost every other republic) produced a “war of laws” between the centre and the republics, which withheld taxes and goods from Moscow. Russia’s declaration mattered most because without Russia there could be no Union. When Yeltsin, touring the autonomous republics inside Russia in August 1990, encouraged them to take as much sovereignty as they could swallow, he weakened Moscow’s control further, and set a precedent that would come back to trouble the Russian state in Chechnya.
The diagram of the causes of the collapse groups the factors by timescale. Long-term weaknesses made reform necessary; the short-term causes, most of them consequences of the reforms themselves, made the system fall apart once reform began; and the failed coup of August 1991 destroyed the remaining authority of the party and the central state.
The relationship between the factors matters more than any one of them. Stagnation explains why a reformer was chosen in 1985, but not why the system collapsed six years later. Glasnost and democratisation removed the party’s ability to hide failure and suppress opposition at the same moment as perestroika made the economy worse, and the loss of Eastern Europe showed that force would not be used. Each reform weakened a support of the system (the party, the plan, the threat of force) before anything had been built to replace it.
The transition was carried out from above, by two leaders who began as allies within the same party and became rivals. Gorbachev opened up the Soviet system; Yeltsin used the openings Gorbachev created to build a separate Russian centre of power, took over the institutions of the Union when it collapsed, and then imposed a market economy and a new constitution on Russia.
By 1990 Gorbachev was trying to hold together a Union whose republics were claiming sovereignty. His answer was a new Union Treaty that would turn the USSR into a looser federation of sovereign republics with a common president, army and currency. To strengthen his hand he called a referendum on 17 March 1991, the first in Soviet history, asking whether citizens wanted to preserve the USSR as “a renewed federation of equal sovereign republics”.
About 80 per cent of eligible voters took part, and about 76 per cent of them voted yes. Six republics (the three Baltic states, Georgia, Armenia and Moldova) refused to hold the vote. In Russia, voters were also asked whether they wanted a directly elected Russian president, and about 70 per cent said yes. The two results pointed in different directions: most citizens wanted the Union to continue, but Russians also wanted a leader of their own.
On 23 April 1991 Gorbachev and the leaders of nine republics, including Yeltsin, reached the “nine plus one” agreement on a new treaty, which shifted large powers, including control of taxes and natural resources, from the centre to the republics. The treaty was due to be signed on 20 August 1991.
Boris Yeltsin (1931–2007) had been a construction engineer and party boss in Sverdlovsk before Gorbachev brought him to Moscow. His dismissal as Moscow party chief in 1987, after he criticised the slow pace of reform and the privileges of the leadership, turned him into a popular hero. He presented himself as an ordinary Russian who rode the bus and attacked the nomenklatura, and he combined this populism with the demands of the democratic movement for free elections and a market economy.
On 12 June 1991 Yeltsin was elected President of the RSFSR with about 57 per cent of the vote, defeating the official communist candidate, Nikolai Ryzhkov, who won about 17 per cent. He became the first leader in Russian history chosen in a popular election, which gave him a legitimacy that Gorbachev, elected President of the USSR only by the Congress of People’s Deputies, never had.
The timeline of 1991 shows how fast power shifted after the August coup. After the coup failed, Gorbachev returned from his detention in Crimea to find that Yeltsin controlled Moscow. On 23 August, in front of television cameras in the Russian parliament, Yeltsin made Gorbachev read out the minutes of the meeting at which his own ministers had backed the coup, and signed a decree suspending the activities of the Russian Communist Party.
In the autumn of 1991 most republics declared independence, and Russia took over Soviet ministries and the state bank one by one. Gorbachev continued to negotiate a looser union, but on 1 December more than 90 per cent of Ukrainian voters backed independence, and Ukraine’s leaders made clear they would sign no union treaty. Without Ukraine, Yeltsin saw little point in a union in which Russia would have to subsidise the Central Asian republics.
On 8 December 1991, at a hunting lodge in the Belovezha Forest in Belarus, the leaders of Russia (Yeltsin), Ukraine (Leonid Kravchuk) and Belarus (Stanislav Shushkevich) signed the Belovezha Accords, also called the Minsk Agreement.
We, the Republic of Belarus, the Russian Federation (RSFSR), and Ukraine, as originator states of the USSR on the basis of the Union Treaty of 1922, and designated below as the High Contracting Parties, confirm that the USSR as a subject of international law and a geopolitical entity, now ceases to exist.
Agreement Establishing the Commonwealth of Independent States (the Minsk Agreement), preamble, 8 December 1991 (English translation in the GRIPS–University of Tokyo database The World and Japan). The three leaders based their right to dissolve the Union on the claim that their republics had founded it in 1922, which allowed them to act without Gorbachev or the other republics. The document is evidence of how the Union was ended: by agreement among republican leaders, not by popular vote, which is why Gorbachev and many Russians later called it illegitimate.
On 21 December eleven republics signed the Alma-Ata Protocol joining the Commonwealth of Independent States (CIS). Gorbachev resigned as President of the USSR on 25 December 1991, handed the nuclear launch codes to Yeltsin, and the Soviet flag was lowered over the Kremlin that evening. The next day the upper chamber of the Soviet parliament voted the USSR out of existence. The Russian Federation, under its existing 1978 constitution and with Yeltsin as president, became the successor state of the USSR, taking its seat on the UN Security Council, its embassies and its debts.
YouTubeGorbachev’s farewell address, broadcast on 25 December 1991, gave his own verdict on the reforms he had begun.
The reason could already be seen: the society was suffocating in the vise of the command-bureaucratic system, doomed to serve ideology and bear the terrible burden of the arms race. It had reached the limit of its possibilities. All attempts at partial reform, and there had been many, had suffered defeat, one after another. … The old system collapsed before the new one had time to begin working and the crisis in the society became even more acute.
Mikhail Gorbachev, resignation address on Soviet television, 25 December 1991 (translation in World History Commons). Gorbachev was speaking on the day he left office, to defend his record against critics who blamed him for the collapse. The address is valuable evidence of how he justified the reforms, but as self-defence it says nothing about his own mistakes, such as the abandonment of the 500 Days plan or the shift to the hardliners in 1990–1991.
Mikhail Gorbachev | Boris Yeltsin | |
|---|---|---|
Aim | A more efficient, more democratic socialism within a renewed Union | At first, radical reform within the USSR; from 1990, Russian sovereignty, democracy and a market economy |
Source of power | The party, then the Soviet presidency, elected by the Congress | Popular support and elections: Russian parliament (1990), Russian presidency (1991) |
Main achievements | Glasnost; contested elections; end of the Cold War; peaceful end of communist rule in Eastern Europe | Defeated the 1991 coup; ended the Soviet system peacefully; launched market reforms and the 1993 constitution |
Main failures | Economic collapse; lost control of the republics and the party; turned to hardliners in 1990–1991 | Economic depression and inequality; violence in 1993 and Chechnya; rule by decree and dependence on oligarchs |
Reputation in Russia | Widely blamed for the collapse of the USSR and the hardship that followed | Widely blamed for the “wild nineties”; very low approval by 1999 |
The comparison table shows that the two leaders’ roles were complementary as well as opposed. Gorbachev made the transition possible by ending the party’s monopoly and refusing to use large-scale force; Yeltsin turned that opening into a new state. Many historians give Gorbachev the greater share of responsibility for the end of Soviet communism and Yeltsin the greater share for what replaced it.
After the coup Yeltsin had to decide how to rescue an economy in free fall. In a speech to the Russian Congress of People’s Deputies on 28 October 1991 he announced a programme of radical reform and asked for the power to carry it out by decree for a year. According to a press report of the speech, he told the deputies that it was “time to act decisively, harshly, without hesitation”, adding: “We won’t be able to carry out reforms painlessly. The first step will be the most difficult.” The Congress granted him the powers he asked for.
Yeltsin made himself prime minister and gave economic policy to a team of young liberal economists led by Yegor Gaidar (deputy prime minister, then acting prime minister from June to December 1992), with Anatoly Chubais in charge of privatisation. They were advised by Western economists such as Jeffrey Sachs of Harvard, who had helped design Poland’s reforms of 1990, and they sought loans from the International Monetary Fund (IMF).
The reformers argued for shock therapy for political as well as economic reasons. The old planning system had already broken down, the state had no money and almost no reserves, and they believed that a window for reform had opened after the coup that might soon close. Gradual reform, they argued, had been tried under Gorbachev and had failed, and only rapid change could create a class of owners with a stake in the new system before the communists could return.
On 2 January 1992 most prices were freed from state control, except for a few staples such as bread, milk, fuel and rents. Goods quickly returned to the shops, but prices rose far faster than wages. Consumer prices rose by roughly 2,500 per cent during 1992, according to most estimates, and the savings that Soviet citizens had accumulated in state savings banks became almost worthless. About one-third of the population fell below the official poverty line in 1992.
Year | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 |
|---|---|---|---|---|---|---|---|---|
Inflation (%, GDP deflator) | 1,490 | 888 | 307 | 144 | 46 | 15 | 19 | 72 |
Real GDP growth (%) | −14.5 | −8.7 | −12.6 | −4.1 | −3.8 | +1.4 | −5.3 | +6.4 |
Data: World Bank, World Development Indicators, 2025. The GDP deflator measures price rises across the whole economy; consumer price indices for 1992 give a higher figure (about 2,500 per cent from December 1991 to December 1992).
The table of inflation and growth shows the two sides of the reform. Inflation was brought down only slowly, because the Central Bank, led from July 1992 by Viktor Gerashchenko, kept issuing credit to state enterprises, and because the parliament resisted spending cuts. Output fell every year until 1997. In December 1992 the Congress forced Gaidar out and Yeltsin appointed Viktor Chernomyrdin, a former Soviet gas minister, as prime minister, who slowed the reforms but did not reverse them.
Privatisation was meant to turn state enterprises into private companies whose owners would run them efficiently. Chubais’s State Property Committee chose a method designed to be fast and to look fair.
About 144 million vouchers were issued. By mid-1994 more than 14,000 medium and large enterprises, employing most of the industrial workforce, had been privatised. In most cases, however, the managers and workers of an enterprise were allowed to buy a majority stake on favourable terms, so ownership passed mostly to insiders, above all to the existing managers (the “red directors”). Many citizens, unsure what to do with their vouchers, sold them for cash or invested them in voucher funds, many of which proved worthless.
The voucher shows the promise of voucher privatisation: a share of national property for every citizen. The reality was different. Few ordinary Russians gained much from their vouchers, while insiders and those with access to cash and information bought up shares cheaply. The collapse in July 1994 of MMM, a pyramid scheme that had attracted millions of small investors with television advertising, added to the sense that the new market economy was a swindle.
The second stage of privatisation was more controversial. In 1995 the government, short of revenue, accepted a scheme proposed by the banker Vladimir Potanin. Under loans-for-shares, banks lent money to the state and received as collateral the state’s shares in some of the most valuable companies in the country. When, as expected, the government did not repay the loans in 1996, the banks sold the shares, usually to themselves, in auctions they organised. Potanin’s Oneximbank gained control of Norilsk Nickel, the world’s largest nickel producer; Mikhail Khodorkovsky’s Menatep bank gained the oil company Yukos; Boris Berezovsky and Roman Abramovich gained Sibneft. In each case the price was a small fraction of the companies’ later market value.
The loans-for-shares auctions created the oligarchs, a handful of bankers and industrialists who also owned the main television channels and newspapers. In early 1996, with Yeltsin’s approval ratings in single figures and the communist leader Gennady Zyuganov leading the polls, the leading oligarchs agreed to fund and run Yeltsin’s re-election campaign. Their television channels gave Yeltsin overwhelmingly favourable coverage. He came first in the first round on 16 June (about 35 per cent to Zyuganov’s 32 per cent), won the support of the third-placed candidate, General Alexander Lebed, and beat Zyuganov in the run-off on 3 July 1996 by about 54 per cent to 40 per cent. A serious heart attack between the two rounds was kept secret.
After the election, several oligarchs held government posts, and in late 1996 Berezovsky claimed in an interview with the Financial Times that seven bankers controlled about half of the Russian economy. Russians called this the semibankirshchina, the “rule of the seven bankers”, a play on the name for a seventeenth-century period of rule by seven boyars.
YouTubeA market economy needed a new tax system, because the Soviet state had funded itself mainly from the profits and turnover taxes of its own enterprises. In 1992 Russia introduced a value added tax at 28 per cent, a profits tax and a personal income tax. The system that resulted was chaotic. Rates and rules changed often, regions and the centre competed for revenue, and Yeltsin granted tax privileges to favoured firms and regions.
Tax collection collapsed. Enterprises avoided taxes by paying each other in goods rather than money, so that by 1998 about half of industrial sales were made through barter and other non-cash means, according to Russian surveys. The state in turn failed to pay its own bills, so that unpaid wages and pensions built up. The government covered its deficit by borrowing: from 1993 it issued short-term rouble bonds, the GKO, at very high interest rates, and from the IMF, which approved a three-year loan of about US$10 billion in 1996.
The first part of a new Tax Code, setting out general principles, was passed in July 1998 and came into force in January 1999. The more important second part, which introduced the flat 13 per cent income tax, came only in 2000–2001, under Putin.
By 1998 the GKO market had become a pyramid: the government was issuing new bonds to pay the interest on old ones. The Asian financial crisis of 1997 made investors nervous of emerging markets, and the price of oil, Russia’s main export, fell to about US$12 a barrel in 1998. Despite an IMF-led rescue package of about US$22.6 billion agreed in July 1998, investors fled. On 17 August 1998 the government of Prime Minister Sergei Kiriyenko defaulted on its rouble debt, suspended payments on some foreign debt and let the rouble fall. By September the rouble had lost about two-thirds of its value against the dollar, banks collapsed and many people lost their savings for the second time in seven years.
Yeltsin dismissed Kiriyenko and, after the Duma twice rejected Chernomyrdin’s return, appointed the former foreign minister and intelligence chief Yevgeny Primakov as prime minister in September 1998. The crisis discredited the liberal reformers. Its effects were not all negative: the cheap rouble made imports expensive and Russian goods competitive, and, helped by rising oil prices, the economy grew by about 6 per cent in 1999.
Independent Russia began life with the constitution of the RSFSR, adopted in 1978 and amended hundreds of times. It made the Congress of People’s Deputies, elected in 1990 under Soviet rules, the highest organ of state power, able to amend the constitution itself, while the 1991 amendments had also created a strong elected president. Each side could claim to be supreme, and from 1992 they fought over who controlled economic policy and the government.
Parliament was led by the Chairman of the Supreme Soviet, Ruslan Khasbulatov, an economist from Chechnya who had been Yeltsin’s ally in 1991. Yeltsin’s own vice-president, Alexander Rutskoi, an air force general and hero of the Afghan war, also turned against the reforms. Most deputies opposed shock therapy, which they blamed for the fall in living standards, and supported the industrial managers who wanted cheap credit. In December 1992 the Congress forced Gaidar out; in March 1993 it tried to impeach Yeltsin and failed by only 72 votes.
Yeltsin appealed to the voters. In a referendum on 25 April 1993 they were asked four questions, and Yeltsin’s supporters urged them to answer “yes, yes, no, yes” (da, da, net, da).
Question | Yes (% of votes cast) | Result |
|---|---|---|
Do you have confidence in President Yeltsin? | 58.7 | Victory for Yeltsin |
Do you approve of the socio-economic policy of the President and the government since 1992? | 53.0 | Victory for Yeltsin, despite the hardship of reform |
Should early elections be held for the presidency? | 49.5 | No early presidential election |
Should early elections be held for the Congress of People’s Deputies? | 67.2 | Majority for early elections, but not of the whole electorate, which the Constitutional Court had ruled was needed |
Data: Central Electoral Commission of Russia, 1993; turnout was about 64 per cent.
The referendum strengthened Yeltsin but changed nothing in law. Yeltsin and parliament prepared rival drafts of a new constitution, and neither would accept the other’s. On 21 September 1993 Yeltsin issued Decree No. 1400, “On Phased Constitutional Reform”, which dissolved the Congress and the Supreme Soviet and called elections to a new parliament for December. The decree had no basis in the existing constitution, and the Constitutional Court ruled that night that it was unconstitutional and grounds for removing the president. Parliament voted to depose Yeltsin and swore in Rutskoi as president. The two-week standoff that followed ended with the army shelling the parliament building on 4 October 1993.
With parliament defeated, Yeltsin had a free hand to write the constitution he wanted. The draft was published in November and put to a referendum on 12 December 1993, the same day as elections to the new parliament. According to official figures about 58 per cent of voters approved it on a turnout of about 55 per cent, just above the 50 per cent threshold for a valid vote. Some analysts later argued that turnout had been inflated to pass that threshold, but the result was accepted, and the constitution came into force on 25 December 1993.
Article 80 … 3. According to the Constitution of the Russian Federation and the federal laws the President of the Russian Federation shall determine the guidelines of the internal and foreign policies of the State. … Article 90. 1. The President of the Russian Federation shall issue decrees and orders. 2. The decrees and orders of the President of the Russian Federation shall be obligatory for fulfillment in the whole territory of the Russian Federation.
Constitution of the Russian Federation, adopted by referendum on 12 December 1993, Articles 80 and 90 (official English translation, constitution.ru). The constitution was written by Yeltsin’s team after his victory over parliament, and these articles show its purpose: to give the president the power to set policy and to govern by decree, which Yeltsin had lacked in 1992–1993. Article 90 adds that decrees must not contradict the constitution or federal laws, but in practice a weak parliament found it hard to enforce this.
The diagram of the 1993 constitution shows why it is often called super-presidential. The main features of the system were:
The president was elected directly for four years (at most two terms in a row). He appointed the prime minister with the Duma’s consent, and if the Duma rejected his candidate three times, he dissolved it and called new elections. He appointed ministers, issued decrees with the force of law, commanded the armed forces, directed foreign policy and could call referendums.
The Federal Assembly had two chambers. The State Duma had 450 deputies, half elected from party lists and half in single-member constituencies; it passed laws and approved the budget. The Federation Council had two members from each of the 89 regions and republics, the “subjects” of the federation.
Removing the president was made very difficult: impeachment needed a charge of treason or another grave crime, two-thirds majorities in both chambers and rulings by two courts.
Rights. Chapter 2 guaranteed civil and political rights, including freedom of speech, assembly and religion, the right to private property and a ban on censorship; Article 15 declared that international treaties took precedence over Russian law where they conflicted.
Supporters of the constitution argued that a super-presidential system was needed to carry through reforms against a hostile parliament and to hold a vast country together. Critics argued that it weakened parties and parliament and allowed the president to rule with little accountability, a pattern that Putin later used to strengthen his own power. The elections held on the same day showed that the voters were not behind Yeltsin’s reforms: the nationalist Liberal Democratic Party of Russia of Vladimir Zhirinovsky, which was neither liberal nor democratic, won about 23 per cent of the party-list vote, ahead of the pro-government Russia’s Choice (about 16 per cent) and the Communist Party of the Russian Federation (about 12 per cent).
The transition was contested at every stage. Defenders of the old order tried to stop it by force in 1991; the conflict between president and parliament was settled by force in 1993; the economic reforms brought a decade of hardship; and the attempt to hold the new federation together by force led to war in Chechnya.
The Union Treaty due to be signed on 20 August 1991 would have taken most powers away from the central ministries, the army and the KGB. Senior officials who believed it would destroy the Soviet state decided to stop it. On 18 August a delegation visited Gorbachev at his holiday house at Foros in Crimea and demanded that he declare a state of emergency. When he refused, he was cut off and held under guard.
Early on 19 August Soviet radio and television announced that the State Committee on the State of Emergency had taken power. Its members were Vice-President Gennady Yanayev, Prime Minister Valentin Pavlov, KGB chairman Vladimir Kryuchkov, Defence Minister Dmitry Yazov, Interior Minister Boris Pugo, and three representatives of the military-industrial complex and the farm sector (Oleg Baklanov, Vasily Starodubtsev and Alexander Tizyakov). They banned demonstrations, closed most newspapers and sent tanks into Moscow. State television broadcast Tchaikovsky’s ballet Swan Lake in place of the news.
Yeltsin drove to the White House, the building of the Russian parliament and government, and at about midday climbed onto a tank outside it to read an appeal to the citizens of Russia.
Citizens of Russia: On the night of 18-19 August 1991, the legally elected president of the country was removed from power. Regardless of the reasons given for his removal, we are dealing with a rightist, reactionary, anti-constitutional coup. … We appeal to citizens of Russia to give a fitting rebuff to the putschists and demand a return of the country to normal constitutional development. … Until these demands are met, we appeal for a universal unlimited strike.
Boris Yeltsin, appeal “To the Citizens of Russia”, read outside the Russian White House, 19 August 1991 (contemporary English translation). With the coup leaders controlling state television, Yeltsin had to reach people through the crowd, foreign journalists, radio stations the coup had not closed and fax machines. The appeal defends Gorbachev and the constitution, which allowed Yeltsin to present himself as the defender of legality; the image of him on the tank, broadcast around the world, became as important as the words.
Tens of thousands of Muscovites built barricades around the White House. Some tank crews went over to Yeltsin’s side, and leading commanders, including those of the airborne forces and the KGB’s Alpha special unit, were unwilling to storm the building. On the night of 20–21 August three young men, Dmitry Komar, Vladimir Usov and Ilya Krichevsky, were killed in a clash with an armoured column in a tunnel near the White House. On 21 August Yazov ordered the troops out of Moscow, and the coup collapsed. Pugo shot himself; the other leaders were arrested.
The coup failed because its leaders were divided and indecisive, did not arrest Yeltsin at the start, and could not rely on the army to fire on civilians. Its consequences were the opposite of what its leaders intended:
Gorbachev returned to Moscow powerless. He resigned as General Secretary on 24 August and called for the Central Committee to dissolve itself.
The Communist Party was suspended and then, by Yeltsin’s decree of 6 November 1991, banned on Russian territory and its property taken by the state.
Ukraine declared independence on 24 August, and most other republics followed within weeks.
Yeltsin became the dominant figure in Moscow, and Russian institutions took over Soviet ones.
Yeltsin’s decree banning the party justified the ban by the party’s role in the coup, stating that the events of August had made it “glaringly obvious that the CPSU was never a party” but “a special mechanism for shaping and exercising political power by fusing with state structures”. The Constitutional Court later ruled in 1992 that the ban on the party’s leading bodies was lawful but that its ordinary local branches could not be banned, which allowed the Communist Party of the Russian Federation to be founded in 1993.
After Decree No. 1400 of 21 September 1993, several hundred deputies, with Rutskoi and Khasbulatov, stayed inside the White House, which was surrounded by police and had its electricity, telephones and hot water cut off. Armed volunteers, among them communists, nationalists and members of the paramilitary Russian National Unity, gathered to defend it. Negotiations through the Russian Orthodox Church failed.
On 3 October a crowd of parliament’s supporters broke through the police cordon. Rutskoi called on them to seize the Moscow mayor’s office, which they did, and then to take the Ostankino television centre, where an assault was beaten back by troops with heavy loss of life. Yeltsin declared a state of emergency. After hesitation, the army agreed to act: on the morning of 4 October tanks shelled the upper floors of the White House and troops stormed it. By evening Rutskoi, Khasbulatov and the other leaders had surrendered and been arrested.
The official list of the dead compiled by the Prosecutor-General’s investigators in 1994 named 147 people: 46 at Ostankino and 101 around the White House, including 24 soldiers and police. Some other counts are higher, and some of Yeltsin’s opponents claimed many hundreds or more. The higher estimates have never been confirmed, and the exact number remains disputed. The parliamentary leaders were amnestied by the new Duma in February 1994.
Yeltsin had prepared foreign opinion before he acted. On the evening of 21 September 1993 he spoke by telephone with the US President, Bill Clinton.
Bill, the Supreme Soviet has totally gone out of control. It no longer supports the reform process. They have become communist. We cannot no longer put up with that. For that reason, today I signed a decree on elections to a new democratic assembly to take place on December 11 and 12. In that period, the Supreme Soviet and Congress actions will not have any effect. Everything will be governed by Presidential decree. All the democratic forces are supporting me.
Boris Yeltsin, in the White House memorandum of his telephone conversation with President Bill Clinton, 21 September 1993 (declassified 2018; William J. Clinton Presidential Library). The memorandum was written by American note-takers from an interpreter’s rendering, so the wording is not Yeltsin’s own Russian. In the same call Clinton told Yeltsin that the US Senate was about to vote on a US$2.5 billion aid package, and Yeltsin promised that the elections would be free and that he did not want bloodshed.
August 1991 | October 1993 | |
|---|---|---|
Who challenged whom | Soviet hardliners against Gorbachev’s Union Treaty and Yeltsin’s Russia | Russian parliament against President Yeltsin’s decree and reforms |
Role of the White House | Defended by crowds as the seat of Russian democracy | Defended by armed opponents of Yeltsin and shelled by the army |
Role of the army | Refused to fire on the crowds | After hesitating, obeyed Yeltsin and shelled parliament |
Deaths | Three | 147 on the official list; other counts higher |
Outcome | End of the CPSU and, within four months, the USSR | A new constitution with a dominant presidency |
The comparison of the two crises shows the change in Yeltsin’s position between 1991 and 1993. In 1991 he defended a parliament against unconstitutional force; in 1993 he used force against a parliament after acting unconstitutionally himself. His supporters argued that he had prevented a communist and nationalist revival and a possible civil war; his critics argued that the shelling of parliament set a precedent of settling political disputes by force and of a presidency above the law.
The 1990s were a decade of economic depression in Russia, deeper and longer than the Great Depression of the 1930s in the USA. Part of the fall in output was the collapse of production nobody wanted, such as weapons and goods of poor quality; part was the result of broken supply links between the former Soviet republics; and part was the result of high inflation, high interest rates and the disappearance of investment.
The graph of real GDP shows that output fell in every year from 1990 to 1998 except 1997, and was about 43 per cent lower in 1998 than in 1990. Investment fell even further. Official statistics probably exaggerated the decline, because much activity moved into an untaxed, unrecorded “grey” economy, but nobody disputes that most Russians were poorer in the late 1990s than in the late 1980s.
Unpaid wages and pensions. By 1996–1998 millions of workers, including teachers, doctors, miners and soldiers, went months without pay, and wage arrears ran into tens of billions of roubles. Some were paid in kind, in the goods their factories produced.
Barter and the non-cash economy. Firms and regions paid each other and their taxes in goods and IOUs, which kept loss-making enterprises alive but starved the state of revenue.
Capital flight. Billions of dollars a year left the country, much of it illegally, as the new rich moved their money abroad.
Regional inequality. Moscow and the oil and gas regions did far better than industrial towns built around a single factory, many of which fell into deep poverty.
The transition created a small class of very rich people and a much larger class of “new poor”. The winners included the oligarchs, many former nomenklatura officials and enterprise managers who became owners, and younger, educated city dwellers who found work in banking, trade and foreign companies. The losers included pensioners, whose savings and pensions were destroyed by inflation, workers in state-funded jobs such as teaching and medicine, and the people of declining industrial towns. Income inequality rose very fast: Russia went from one of the most equal societies in the industrial world to one of the least equal in less than a decade.
The graph of male life expectancy shows the human cost. Life expectancy for Russian men fell from about 64 years in 1989 to under 58 in 1994, an unusually steep fall for a country at peace. Researchers link the rise in deaths, mainly among working-age men, to heart disease, accidents, violence and alcohol poisoning, and in turn to stress, poverty, unemployment and the end of the anti-alcohol campaign. The birth rate also fell sharply, and Russia’s population began to shrink from 1993.
The diagram of the consequences of shock therapy and privatisation separates what the reformers achieved from what the reforms cost. By 1997 goods were plentiful, most of the economy was in private hands and inflation had been brought down, but the costs in poverty, inequality and the power of the oligarchs left a lasting distrust of liberal reform among many Russians.
Strikes had helped to bring down Soviet power: the miners’ strikes of 1989 and the political strikes of March–April 1991, when miners demanded Gorbachev’s resignation, made the coal miners one of Yeltsin’s strongest bases of support. In the 1990s the same workers struck against the effects of Yeltsin’s reforms, above all against unpaid wages.
Coal miners struck repeatedly from 1996 to 1998, as wage arrears built up and the government closed loss-making pits with World Bank support.
In May 1998, in the “rail war”, miners in the Kuzbass, the Komi Republic and elsewhere blocked the Trans-Siberian and other railways for weeks, demanding back pay and Yeltsin’s resignation. In the summer of 1998 miners camped outside the White House, now the seat of the government.
Teachers and doctors also struck over unpaid wages, sometimes going on hunger strike.
Strikes in the 1990s rarely changed government policy. Trade unions were weak and divided, many workers feared losing their jobs altogether, and the state often had no money to pay. The protests nonetheless showed that the working class that had supported Yeltsin against the communist system in 1989–1991 had turned against him by 1998.
Organised crime grew fast in the gap between the collapse of the Soviet state and the creation of a working market economy. The police and courts were weak and corrupt, property rights were unclear, and new businesses had no reliable way to enforce contracts or protect themselves. Criminal groups, often including former sportsmen, soldiers of the Afghan war and police officers, offered “protection” for a share of the profits.
Almost every business needed a krysha. Disputes over property and debts were often settled by violence, and contract killings of bankers, businessmen, journalists and politicians became common. The murder of Vladislav Listyev, the most popular television presenter in Russia and newly appointed head of the main state channel, ORT, on 1 March 1995 shocked the country; it was never solved. The term bandit capitalism came to describe an economy in which criminal violence and business were closely linked.
The sociologist Vadim Volkov, in Violent Entrepreneurs (2002), argues that the criminal groups of the early 1990s were in effect selling a service the state could not provide, the enforcement of property and contracts. As the state grew stronger later in the decade and after 2000, private security firms and, increasingly, state agencies took over this role, and many of the gangs became legal businesses.
Chechnya is a small, mainly Muslim republic in the North Caucasus, with a population of about one million in 1989. The Chechens had resisted Russian conquest in the nineteenth century, and in 1944 Stalin deported the entire Chechen people to Central Asia, accusing them of collaboration with Germany; estimates of the share who died in the deportation and the years that followed range from about a quarter to around half. They were allowed to return only in 1957. This history gave many Chechens a deep distrust of Moscow.
In the parade of sovereignties, Chechen nationalists took power. Dzhokhar Dudayev, a former Soviet air force general, was elected president in October 1991 and declared Chechnya independent on 1 November 1991. Yeltsin declared a state of emergency and sent troops, but the Russian parliament refused to support him and the troops were withdrawn. In March 1992 Chechnya, with Tatarstan, refused to sign the Federation Treaty that defined the powers of Russia’s regions and republics. Tatarstan later negotiated a special bilateral treaty with Moscow (1994); Chechnya did not.
From 1991 to 1994 Chechnya was in effect independent but unrecognised. Its economy collapsed, much of its Russian population left, and it became a centre for smuggling, arms trading and financial fraud. Moscow imposed a blockade and, in 1994, secretly armed and supported Chechen opponents of Dudayev. When their attack on Grozny, the Chechen capital, failed in November 1994 and Russian soldiers serving with them were captured, Yeltsin decided on open military action.
Historians stress several reasons for the decision to invade:
Territorial integrity. Yeltsin and his advisers feared that if Chechnya were allowed to leave, other republics might follow and the Russian Federation could break up as the USSR had.
Oil and transport. A pipeline carrying oil from the Caspian Sea passed through Chechnya, and Grozny had refineries.
Crime and instability. Moscow presented Dudayev’s regime as criminal and claimed to be restoring “constitutional order”, the official term for the operation.
Domestic politics. Some of Yeltsin’s advisers expected a short, victorious war to raise his popularity after the nationalist vote of December 1993. The defence minister, Pavel Grachev, reportedly boasted that a single airborne regiment could take Grozny in a couple of hours.
About 40,000 Russian troops entered Chechnya on 11 December 1994. The army was badly prepared: many soldiers were untrained conscripts, units were thrown together, and commanders had little intelligence about the enemy. The first assault on Grozny on New Year’s Eve 1994 was a disaster, in which armoured columns were trapped in the streets and destroyed; estimates of Russian dead in the battle run from about 1,000 to 2,000. The army then took the city by heavy bombing and artillery fire. The presidential palace fell on 19 January 1995, and fighting in the city ended in March. Much of Grozny was reduced to ruins, and many of the civilians killed were ethnic Russians who had no relatives in the countryside to shelter with.
Chechen fighters withdrew to the mountains and fought a guerrilla war. They also took the war into Russia. In June 1995 a group led by Shamil Basayev seized more than 1,500 hostages in a hospital in Budyonnovsk in southern Russia; after two failed assaults by Russian special forces, in which many hostages died, Prime Minister Chernomyrdin negotiated with Basayev by telephone, live on television, and allowed the fighters to return to Chechnya. In January 1996 a similar raid on Kizlyar in Dagestan ended in a Russian assault on the village of Pervomayskoye.
The war was deeply unpopular in Russia. Independent television, especially the NTV channel, showed its destruction and the deaths of young conscripts, and the Committee of Soldiers’ Mothers campaigned against it. Human rights organisations, including Memorial and Human Rights Watch, documented indiscriminate bombing, the killing of civilians and abuses in “filtration camps”, and Chechen fighters were accused of hostage-taking and the killing of prisoners. Facing re-election in 1996, Yeltsin needed to end the war. Dudayev was killed by a Russian missile on 21 April 1996, but the fighting continued under his successors.
In August 1996, as Yeltsin was being inaugurated for his second term, Chechen fighters led by Aslan Maskhadov retook Grozny, trapping thousands of Russian troops. Yeltsin sent his new Security Council secretary, General Alexander Lebed, to negotiate. On 31 August 1996 Lebed and Maskhadov signed the Khasavyurt Accord: Russian forces would withdraw, and a decision on Chechnya’s status was postponed until 31 December 2001. Maskhadov was elected Chechen president in January 1997, and Yeltsin and Maskhadov signed a peace treaty in Moscow in May 1997.
Category | Estimate | Source of the estimate |
|---|---|---|
Russian military deaths | About 5,500 (official); independent estimates up to about 14,000 | Russian government; Committee of Soldiers’ Mothers |
Chechen fighters killed | About 3,000–10,000 | Chechen leaders and independent researchers |
Civilian deaths | About 30,000–50,000 in most estimates; Chechen sources and Lebed gave up to 80,000–100,000 | Memorial, Russian statistical office, researchers such as John Dunlop |
People displaced | More than 500,000 | International humanitarian organisations |
Casualty figures for the war are disputed because the Russian military concealed losses, no reliable count of civilians was made, and both sides had reasons to inflate or reduce the numbers. The table of estimates gives the range found in most studies.
The war had consequences far beyond Chechnya:
It humiliated the Russian army and showed the weakness of the new Russian state, which could not defeat a small republic.
It damaged Yeltsin’s reputation at home and abroad, and contributed to his low ratings in 1996.
Chechnya was left devastated and lawless. Under Maskhadov, the government could not control the field commanders; kidnapping for ransom became an industry, and radical Islamist groups, some with foreign fighters, gained influence.
In August 1999 Basayev led an armed incursion into neighbouring Dagestan, and in September bombings of apartment buildings in Moscow and other cities killed about 300 people. The government blamed Chechen terrorists, although the responsibility for some of the bombings remains disputed.
The new prime minister, Vladimir Putin, a former KGB officer appointed on 9 August 1999, launched the Second Chechen War in late September 1999 and promised to destroy the terrorists. The war was popular, and it turned Putin, almost unknown at the time of his appointment, into the most trusted politician in Russia within months. In this way the unresolved First Chechen War shaped the succession to Yeltsin.
On 31 December 1999 Yeltsin announced on television that he was resigning, six months before the end of his term, and that Prime Minister Vladimir Putin would be acting president until an election.
I would like to ask your forgiveness. For the fact that many of our dreams have not come true. And for the fact that what seemed easy to us turned out to be excruciatingly difficult. I ask your forgiveness for not justifying the hopes of those who believed that at one stroke, in one burst, we could leap from the gray, stagnant, totalitarian past to a bright, prosperous, and civilized future. I myself believed this. … But it didn’t turn out that way.
Boris Yeltsin, resignation address on Russian television, 31 December 1999 (translation in the Journal of Democracy, April 2000). The address is an unusual admission of failure by a head of state, and it shows how Yeltsin wanted the decade to be remembered: as an honest attempt at a leap from communism that had cost more than expected. It was also part of a carefully planned handover. Resigning early gave Putin the advantage of incumbency in the election of March 2000, and Putin’s first decree as acting president gave Yeltsin and his family immunity from prosecution.
Soviet Union, 1985 | Russian Federation, 1999 | Continuity or change? | |
|---|---|---|---|
State | Federation of 15 republics ruled from Moscow | Russia alone, a federation of 89 regions and republics | Change; Russia kept most of the territory, nuclear arms and the UN seat |
Political system | One-party rule; Article 6 | Elected president and parliament; many parties | Change, with continuity in a dominant executive and weak courts |
Leadership | General Secretary chosen by the Politburo | President elected by the people, ruling largely by decree | Change in legitimacy; continuity in concentration of power |
Economy | State ownership and central planning | Mostly private ownership; market prices | Change; but many managers and officials became the new owners |
Elite | Party nomenklatura | Oligarchs, former nomenklatura, regional governors | Partial continuity: the sociologist Olga Kryshtanovskaya found that about three-quarters of Yeltsin’s presidential administration in the mid-1990s came from the Soviet nomenklatura |
Media and society | Censorship; party control | Free but oligarch-owned media; free religion, travel and association | Change |
Living standards | Low but secure; shortages | Plentiful goods; mass poverty and great inequality | Change, with losses for most people |
The comparison table shows that the transition changed the form of almost everything, but that a good deal survived underneath. Many of the people who ran Russia in 1999 had run parts of the Soviet Union, power was again concentrated in one office, and the new state relied, like the old one, on the export of oil and gas.
Historians and political scientists describe the political system of 1999 in different ways: a delegative democracy (a term coined by Guillermo O’Donnell for elected presidents who govern without effective checks), a “managed” or “hybrid” regime, or, in the description of the Russian political scientist Lilia Shevtsova, a kind of elected monarchy. All these labels share the view that Russia had free elections but weak institutions to restrain the president.
Explanations of the collapse divide between those that stress deep structural problems, which made collapse likely whatever the leadership did, and those that stress the choices of individuals, above all Gorbachev and Yeltsin.
Archie Brown, in The Gorbachev Factor (1996), presents Gorbachev as a transformational leader. The Soviet system could have continued for years without reform; it was Gorbachev’s choice to introduce glasnost, contested elections and freedom of choice for Eastern Europe that changed it. Brown stresses that the system was transformed peacefully because of Gorbachev’s values and his refusal to use mass force.
Stephen Kotkin, in Armageddon Averted: The Soviet Collapse, 1970–2000 (2001), argues that Soviet socialism had already lost its economic competition with the West by the 1970s, a failure hidden by the oil boom. Gorbachev’s attempt to revive socialism dismantled the party’s control, and the elite, rather than defend the system, took over its assets. The collapse was therefore deeply rooted, and its relative peacefulness reflected the elite’s self-interest as well as Gorbachev’s restraint.
Vladislav Zubok, in Collapse: The Fall of the Soviet Union (2021), rejects the idea that the collapse was inevitable. He argues that the economy needed reform, but that Gorbachev chose the wrong reforms, weakening the party and state finances before creating a market, and that Yeltsin’s ambition and the separatism of the republics finished off the Union.
Others have stressed external pressure, notably American triumphalist accounts that credit the arms build-up of the Reagan years, while nationalist historians in the republics emphasise the strength of national movements. Most historians now combine these approaches: long-term weakness made reform necessary, but the speed and the manner of the collapse depended on choices made in 1985–1991.
Historian or writer | Work | Argument | Evidence stressed |
|---|---|---|---|
Anders Åslund (economist, adviser to the Russian government 1991–1994) | How Russia Became a Market Economy (1995) | Rapid reform was necessary and largely successful; the problems came from reforms left incomplete and from rent-seeking by insiders who profited from the gaps | The return of goods in 1992; private ownership by 1994; the damage done by cheap credit to state firms |
Joseph Stiglitz (economist, World Bank chief economist 1997–2000) | Globalization and Its Discontents (2002) | The IMF-led strategy was too fast and ignored institutions; privatisation without the rule of law led to asset-stripping | The depression; inequality; China’s slower, more successful reforms |
Peter Reddaway and Dmitri Glinski | The Tragedy of Russia’s Reforms: Market Bolshevism against Democracy (2001) | The reformers imposed change from above, like the Bolsheviks, against the wishes of most Russians, which undermined democracy | The shelling of parliament in 1993; decree rule; the 1996 election |
Stephen F. Cohen | Failed Crusade: America and the Tragedy of Post-Communist Russia (2000) | American advisers and governments pushed a model that did not fit Russia and backed Yeltsin against his opponents | US support for Yeltsin in 1993 and 1996; the human costs of reform |
Chrystia Freeland; David Hoffman (journalists) | Sale of the Century (2000); The Oligarchs (2002) | Privatisation, above all loans-for-shares, created an oligarchy that captured the state | The 1995–1996 auctions; the oligarchs’ role in the 1996 election |
The debate is partly about economics and partly about politics. Defenders of rapid reform point out that the Soviet economy had already collapsed by 1991, that there was no working state able to manage a gradual transition as China’s Communist Party did, and that the countries of Central Europe that reformed fastest, such as Poland, recovered soonest. Critics answer that Russia lacked the legal institutions, the recent experience of markets and the prospect of joining the European Union that helped Poland, and that the way privatisation was carried out discredited both the market and democracy for many Russians.
A third debate asks how far the authoritarian system built by Putin after 2000 grew out of the 1990s. One view stresses continuity: the 1993 constitution gave the president great power, the shelling of parliament and the 1996 election showed that elections could be managed, the oligarchs showed that wealth could buy influence, and the chaos of the decade made many Russians willing to trade freedom for order. Another view stresses the differences: in the 1990s Russia had competitive elections, a free and critical press, powerful regional governors and a parliament that often defeated the president, all of which Putin later curtailed.
Andrei Shleifer and Daniel Treisman, in “A Normal Country” (Foreign Affairs, 2004), argue against the gloomiest accounts: by 1999 Russia had become a typical middle-income democracy with flaws similar to those of countries such as Mexico or Argentina, rather than a unique disaster. Russian public opinion has been much harsher. In surveys since the early 2000s most Russians have described the 1990s as a time of decline, and Gorbachev and Yeltsin have usually ranked among the least admired leaders of the twentieth century.
The three questions test different skills: Question 1 the content of sources A and B, Question 2 the context of source C, and Question 3 the perspectives of all three sources. Plan your time so that the 12-mark Question 3 gets about half of it.
Practice set in the style of the IB. Focused study 3: Political and economic transitions. The Russian Federation (1985–1999).
Using the three provided sources on the collapse of the Soviet system and considering the overarching inquiry question of “To what extent was economic stagnation the main reason for the collapse of the Soviet system?”, respond to the following three questions.
Source A: Mikhail Gorbachev, General Secretary of the Communist Party of the Soviet Union, in a report to a plenary session of the party’s Central Committee, published in the newspaper Pravda (1987).
At a certain stage the country began to lose momentum, difficulties and unsolved problems began to pile up, and stagnation and other phenomena alien to socialism appeared. All of this had a serious effect on the economy and on the social and spiritual spheres. … The principal cause … was that the CPSU Central Committee and the country’s leadership, primarily for subjective reasons, were unable to promptly or fully appreciate the need for changes and the danger of the mounting crisis phenomena in society or to work out a clear-cut line aimed at overcoming them … Conservative inclinations, inertia, a desire to brush aside everything that didn’t fit into habitual patterns and an unwillingness to tackle urgent social and economic questions prevailed in both policy-making and practical activity.
Translation from Seventeen Moments in Soviet History. [CPSU: Communist Party of the Soviet Union]
Source B: Vladislav Zubok, a historian at the London School of Economics, in the book Collapse: The Fall of the Soviet Union (2021). Adapted summary of the book’s argument.
The Soviet economy of the early 1980s had serious problems, but it was not doomed: with better policies, carried out firmly from the Kremlin, they could have been overcome. The collapse was caused by Gorbachev’s choice of reforms. He weakened the Communist Party’s role in running the economy and introduced political democracy before a working market existed. His economic reforms, such as the cooperatives, drained the state’s finances, and a state that could not keep a stable currency fell apart within three years. Nationalist movements and the personal ambition of Boris Yeltsin, who preferred Russian power to saving the Union, then completed the collapse.
Source C: The State Committee on the State of Emergency, a group of senior Soviet officials who had taken power from Gorbachev, in an appeal to the Soviet people broadcast by the official news agency TASS and published in English in The New York Times (1991).
The policy of reforms, launched at Mikhail S. Gorbachev’s initiative and designed as a means to insure the country’s dynamic development and the democratization of social life has entered for several reasons a blind alley. Lack of faith, apathy, and despair have replaced the original enthusiasm and hopes. … The power crisis has had catastrophic effects on the economy. The chaotic, spontaneous slide toward a market provoked an explosion of egoism-regional, departmental, group, and personal. The war of laws and encouragement of centrifugal tendencies spelled destruction of the integral national economic mechanism that has been shaping for decades. The result includes sharp drops in the living standards of the vast majority of the Soviet people, and the blossoming of profiteering and the shadow economy.
[centrifugal tendencies: pressures pulling the republics away from the centre]
I can explain how the Communist Party controlled the Soviet Union in 1985, including Article 6 and the nomenklatura.
I can explain why Gorbachev was chosen in 1985 and how he tried to reform the party, from the 19th Party Conference to the abolition of Article 6.
I can explain the causes of the era of stagnation and why acceleration, the anti-alcohol campaign and perestroika made the economy worse.
I can explain the significance of glasnost, Chernobyl and the miners’ strikes of 1989.
I can explain how new thinking and the revolutions of 1989 in Eastern Europe encouraged national movements inside the USSR, including Russia’s declaration of sovereignty.
I can weigh long-term, short-term and immediate causes of the collapse of the Soviet system and reach a judgement.
I can compare the roles of Gorbachev and Yeltsin in the transition, with evidence for each.
I can describe how the USSR was dissolved in December 1991, including the Belovezha Accords and the CIS.
I can explain shock therapy, price liberalisation, voucher privatisation and loans-for-shares, and distinguish between them.
I can explain Russia’s tax and debt problems and the causes and effects of the August 1998 crisis.
I can explain how the conflict between president and parliament led to Decree No. 1400, and describe the main features of the 1993 constitution.
I can explain why the August 1991 coup failed and what it changed, and compare it with the October crisis of 1993.
I can use data on output, inflation and life expectancy to explain the economic and social costs of the transition.
I can explain the causes and impact of labour strikes and organised crime in the 1990s.
I can explain the causes, course and consequences of the First Chechen War, including the range of casualty estimates.
I can assess continuity and change between the Soviet Union of 1985 and the Russian Federation of 1999.
I can outline the views of Brown, Kotkin, Zubok, Åslund, Stiglitz and others, and explain why historians disagree.
I can analyse the content, context and perspectives of sources on the Russian transition and use them to answer an inquiry question.