1Gorbachev and Yeltsin

Gorbachev's position, 1990–1991. In March 1990 Gorbachev became President of the USSR with wide powers. But three forces were pulling the union apart:

• The republics: Lithuania declared independence on 11 March 1990, and by the end of the year every republic had made some declaration of sovereignty.
• The economy: shortages and strikes (see R1) were blamed on the centre.
• The Party: hard-liners thought he had gone too far, reformers that he had not gone far enough.

He tried to hold the union together by negotiation. In a referendum on 17 March 1991 about 76% of voters in the nine republics that took part (six boycotted) said yes to a "renewed union". With the leaders of nine republics he agreed at Novo-Ogaryovo in April 1991 on a looser union (the "9+1" agreement), and a new Union Treaty was ready to be signed on 20 August 1991.

Yeltsin's rise. Yeltsin had been dismissed in 1987 (see R1) but returned to politics through the new system Gorbachev himself had built:

• In March 1989 he won a seat in the Congress of People's Deputies with about 89% of the vote in Moscow.
• In May 1990 he was elected chairman of the Russian Supreme Soviet, narrowly. On 12 June 1990 the Russian parliament declared Russia's sovereignty, saying that Russian laws came before Soviet ones.
• In July 1990 he left the Communist Party at its 28th Congress, in front of the delegates.
• A "war of laws" followed: Russia and the USSR each claimed the taxes, the oil and the factories on Russian territory.
• In June 1991 he was elected President of Russia by direct popular vote, with about 57% of the vote, the first leader in Russian history chosen in a free election. Gorbachev had never been elected by the people at all.

From then on there was dual power: Gorbachev held the Kremlin, the army and the KGB, while Yeltsin held the legitimacy of a popular vote and the support of Russia's new democrats.

The August coup and its effect. On 19 August 1991, one day before the Union Treaty was to be signed, eight hard-liners announced that Gorbachev was ill and set up an Emergency Committee (R3 gives the details). The coup failed in three days, with Yeltsin resisting at the Russian parliament building, the "White House". Its effects decided the transition:

• Gorbachev returned a weaker man, resigned as General Secretary on 24 August, and the Party was suspended; Yeltsin banned its work in Russia.
• Yeltsin took control of the Soviet ministries, the KGB's leadership changed and the republics, one after another, declared independence.
• The Baltic states' independence was recognised on 6 September. On 1 December Ukraine voted by about 90% for independence; without Ukraine, Yeltsin and the others judged, a union was pointless.

The end of the Soviet Union. On 8 December 1991 Yeltsin and the leaders of Ukraine (Leonid Kravchuk) and Belarus (Stanislav Shushkevich) met in a forest lodge at Belovezha and signed accords declaring that the USSR, which they had founded in 1922, "as a subject of international law and a geopolitical reality, ceases its existence", and creating a Commonwealth of Independent States (CIS). On 21 December, at Alma-Ata, eleven republics joined it. On 25 December Gorbachev announced on television that he was resigning as President, because the post no longer existed; the Soviet flag over the Kremlin was lowered that evening and the Russian tricolour raised. The next day the upper chamber of the Soviet parliament formally recorded the dissolution.

Two roles compared.

Gorbachev began the transition and Yeltsin completed it, but not in the way either planned. Gorbachev did not mean to end the USSR; Yeltsin, who in 1990 was demanding Russian sovereignty inside it, did not plan the Belovezha Accords in advance.

2The Constitution of 1993

The problem. After 1991 Russia had no constitution of its own: it was run under the old Soviet-era Russian constitution with many changes. It left the lines of authority unclear. Yeltsin as president had been given special decree powers for a year to carry out reform, but the Congress of People's Deputies and the Supreme Soviet, elected in 1990 when the Party still dominated, claimed the supreme authority. They were led by their chairman Ruslan Khasbulatov, and Vice-President Aleksandr Rutskoi became a critic of Yeltsin's economic policy. In December 1992 the Congress refused to confirm Yegor Gaidar as prime minister; Yeltsin compromised on Viktor Chernomyrdin. In April 1993 a referendum asked four questions: about 59% said they had confidence in Yeltsin and 53% supported his economic policy. That strengthened the president but did not end the struggle, which in the autumn broke into violence (R3). After it, Yeltsin put his own constitution to the voters.

The vote. On 12 December 1993 voters took part in a referendum on the draft constitution, and at the same time elected the first State Duma. Official figures were about 58% in favour, with a turnout of about 55%, just above the 50% needed for the draft to pass; some Russian analysts later argued that the turnout was inflated. In the Duma election the nationalist Vladimir Zhirinovsky's Liberal Democratic Party won about 23% of the party-list vote, the pro-reform Russia's Choice about 15% and the Communists about 12%. For Yeltsin's supporters it was a poor result: the voters had approved the constitution but not his party. The constitution came into force on 25 December 1993.

What it says.

• State and rights. Russia is a "democratic federal law-governed state with a republican form of government" (Article 1). Chapter 2 sets out a wide range of rights and freedoms, modelled on the international ones; Article 13 forbids any state ideology and allows several parties, so no party can claim the Communist Party's old monopoly.
• The president. The president is head of state, "guarantor" of the Constitution, commander-in-chief and the main maker of foreign policy. He is elected by the people for four years, with a limit of two consecutive terms. He appoints the prime minister with the Duma's consent, chooses the other ministers and can issue decrees that have the force of law if they do not conflict with the constitution or laws.
• Over the parliament. If the Duma rejects his candidate for prime minister three times, the president dissolves it and calls elections. If it votes no confidence in the government twice within three months, he can dismiss the government or dissolve the Duma. He can propose laws and veto bills (a veto needs a two-thirds vote of both houses to override).
• Impeachment is so hard that it is almost impossible: charges by the Duma by a two-thirds majority, then rulings by the Supreme Court and the Constitutional Court, then a two-thirds vote of the Federation Council.
• The parliament. The Federal Assembly has two houses: the Federation Council (two members from each of the 89 regions and republics of the federation) and the State Duma (450 deputies, half elected from party lists and half from single-member districts).
• Courts and federalism. A Constitutional Court was set up; the federation's 89 "subjects" (republics, regions, cities) have their own governments, though the relationship was still being worked out; the Federation Treaty of March 1992 had been signed by all except Tatarstan and Chechnya (see R3).

Perspectives. Supporters argued that after the paralysis of 1992–93 a strong president was needed to carry out reform and hold together a huge, unstable state; Yeltsin's advisers pointed to France's Fifth Republic as a model. Critics, including many Russian liberals and Western political scientists, called it "super-presidential": the president had few checks, the Duma had little power over the government and impeachment was a dead letter. They also said the constitution was passed on a disputed turnout, after tanks had shelled parliament, by a president who had unilaterally set aside the old one. Continuity and change: the constitution broke with the Soviet system by guaranteeing rights, a multiparty system and a separation of powers, but kept a tradition of a single, powerful centre of authority.

3Privatisation, market liberalisation and tax reforms

The decision. On 28 October 1991 Yeltsin told the Russian Congress that Russia would move to a market economy at once. In November he put the young economist Yegor Gaidar in charge of economic policy (as deputy prime minister, and acting prime minister from June to December 1992), with Anatoly Chubais responsible for privatisation. Their view was that gradual reform had failed under Gorbachev; a window of political opportunity was open, and delay would lose it. They were supported by Western advisers such as Jeffrey Sachs and, from 1992, by the IMF, which Russia joined in June 1992.

Liberalisation. On 2 January 1992 most prices were freed. Trade was opened and the rouble's exchange rate was made market-based in the course of 1992. Subsidies and military orders were cut. A new tax system came in with a value-added tax (VAT) of 28% (cut to 20% in 1993), profit tax and income tax. The immediate effect was the opposite of what the planners hoped for in one respect: instead of a short jump, prices rose about twenty-six times in 1992 (inflation of about 2,500%), wiping out savings. The shops, though, filled with goods.

Privatisation.

• Small privatisation (shops, restaurants, services) began in 1992 and was quick and popular.
• Voucher privatisation: from October 1992 every citizen received a voucher with a face value of 10,000 roubles, some 144 million in all, which could be exchanged for shares in a firm or sold. By law managers and workers could get a controlling share in most firms; by 1994 most of Russia's large and medium-sized industry, some 15,000 firms, had been privatised. Many people sold their vouchers for little, to be bought up by managers and speculators.
• Loans for shares (1995): to fill the budget the government borrowed money from a few big banks and gave them shares in the best state companies as collateral, with the right to sell them if the loan was not repaid. The auctions were rigged to favour the lenders: Norilsk Nickel went for about $170 million and Yukos (a 45% stake) for about $159 million, far below what they were worth. The banks' owners became the oligarchs.
• In the 1996 election the oligarchs and their television channels backed Yeltsin against the Communist candidate Gennady Zyuganov. Yeltsin won in the second round on 3 July 1996 with about 54% to 40%.

Tax and the budget. The government could not collect the taxes it set. Companies paid late, in goods (barter) or hid income; the state's revenue was low, so it borrowed on a large scale at high interest, including through short-term bonds, and cut public spending, which led to wage and pension arrears. In March 1996 the IMF granted a loan of about $10 billion. The first part of a Tax Code was passed only in 1998 and came into force in 1999; the rates were fixed in a second part in 2000.

The outcome by 1996. On European Bank estimates, by the mid-1990s more than half of Russia's output came from the private sector. Russia had a market in goods and a stock market, but not strong courts or competition; many firms were owned by their managers or by a few financial groups. The transition had been achieved in the sense that the plan was gone and property was private. R3 deals with its costs.

4How far was it achieved, and by whom? The historians

The balanced answer is that Gorbachev made the transition possible, Yeltsin made it happen and gave it its form, and the combination of speed, the shape of the state and the rivalry of the leaders explains why it was achieved the way it was.