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. Last Updated: 07/27/2016

INSIDE RUSSIA: 7 Years Later: Corrupt, But Not Socialist




Last week Russian liberals marked an anniversary. Not the anniversary of the Great October Revolution, but of liberal reforms themselves, for on Nov. 6, 1991 Yegor Gaidar was appointed head of the Russian government.


As we can see, seven years of reforms have not brought the country the successes of Hong Kong or Chile. Production has fallen to half the 1991 level; the volume of nonpayments is 50 percent of the gross domestic product, of which between 25 percent and 50 percent is made up by the shadow economy. State workers have not received their pensions for months, and corruption has now reached such a level that people I have spoken with (not Grigory Yavlinsky) are now claiming that a certain member of the government tried to sell the position of finance minister.


Liberal reforms ended with Russia defaulting on its domestic debts. At a government meeting before this infamous day, there was talk of printing more money and using it to buy up all the T-bills circulating on the market - no real solution, but preferable nonetheless to default. This prompted then Deputy Prime Minister Anatoly Chubais to utter something that might be a fitting epitaph to Russian monetarism: "We will not allow inflation."


Now the Russian government will not be able to avoid partial default on its foreign debts. It will probably meet its obligations on Eurobond payments, but debts to the Paris and London creditor clubs will certainly have to be restructured because there simply aren't the means to pay the required $18 billion in the coming year.


In short, it seems that seven years on from Nov. 6, 1991 the liberal government has finally compromised itself across the board. The Communists have come to power.


In promises to the reform-weary nation and the simultaneously loathed and feared West, the Communists say they won't touch the market or close the borders, and that they will even pay the interest on Eurobonds. Although they guarantee to support Russian industry, this does not necessarily entail renationalization, and while they intend to print more money to pay state workers, such emissions are still not the same thing as the rationing system of old.


This reluctance to rush straight back to former ways is clearly due to the Communist Party's own internal corruptness. True socialism has little to offer the left, since it means crooked officials will have no one to sell their services to. If you get rid of traders and entrepreneurs altogether, then who do you send faxes to on State Duma stationary saying, "If you are experiencing difficulties, then deputy such and such can help resolve them?"


Likewise, if the Communists do away with the oligarchs, then who will fund their electoral campaign? Paradoxically, the oligarchs are now emerging as the left's main hope for financial support, since the victory of a weak and corrupt government is better for the bankers than that of either Yury Luzhkov or Alexander Lebed.


It might seem laughable to enthuse about the almost civilized behavior of the left. But it is hard not to concede that now we can look back and see the country has made huge steps. On the way it has wandered off into a seemingly endless wilderness of corruption, but nevertheless Russia has journeyed a long, long way from socialism.


Yulia Latynina is a staff writer for Expert magazine.