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. Last Updated: 07/27/2016

Lost on the Road to Yeltsin's New Era

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Aman has died, thanks to whom a whole new era began. A new democratic Russia was born: a free state open to the world in which power really does belong to the people." Thus did Vladimir Putin laud Boris Yeltsin, the man who chose him for the presidency of his country. Putin was both right and wrong. Yeltsin was the most democratic ruler Russia has ever possessed. Yet what is emerging under his successor is not the vibrant democracy that many hoped for. Yeltsin's legacy is as mixed as was his turbulent nature.

Yeltsin was among the small number of leaders who have transformed the world. His name will ever be linked to that of Mikhail Gorbachev, the last general secretary of the Communist Party of the Soviet Union, an organization that played so catastrophic a part in the history of the 20th century. Yeltsin's courage and charisma brought to an end both the party and the Soviet Union itself.

His enemies will never forgive him for his role in ending the party, the state and the Russian empire in 1991. But those who lived most of their lives in the shadow of the Cold War will always be grateful to him. The sight of him standing heroically against the attempted coup of August 1991 is unforgettable. It was the end of a ghastly era of human history, in which despotism went almost beyond the limits of the imagination.

Yeltsin's courage was partly born of calculation. He was, after all, an apparatchik, versed in the tortuous politics of the Soviet system. He had already staked out his position as the spokesman of radical reform in the politburo and then as the first democratically elected president of Russia. By 1991 he had to oppose the coup. But these were also the correct choices: He was on the right side of history. He recognized that the Soviet Union had become an empty shell and had the effrontery to break it.

Inevitably, Yeltsin didn't know what to do with the power he had gained. This is hardly surprising. He was ill equipped to cope with the political, social, economic and psychological challenges he confronted. Nobody could have been. Inevitably, reform of Russia, whose people felt they had suffered defeat, proved far more difficult than reform in the former empire, most of whose people were enjoying liberation.

Moreover, if Yeltsin had not been the stereotypically turbulent (nay, drunken) Russian that he was, he would not have had the courage to take on the system and win. He never fully understood what a democracy or a market economy was. How could he have? But, to his eternal credit, he did tolerate free speech, he did allow the former republics of the Soviet Union to go their own way, he did give sporadic support to the reformers, he did go ahead with the presidential election in 1996 and, not least, he did leave office peacefully. And notwithstanding all the mistakes he made, he did begin the move to the free market. He was neither a civilized intellectual nor a sophisticated statesman, but, by Russia's dreadful standards, he was little short of a miracle.

History will, I believe, judge that he made three huge mistakes: the war on Chechnya, which brought the security services into the heart of government; the loans-for-shares program of 1995, which transferred a vast part of the natural wealth of Russia into a tiny number of private hands; and the selection of Putin as his successor. These three errors, together, led to a reversal of the move towards a more democratic, liberal and open Russia. But these errors are at least understandable: the first because Russians feared the dissolution of their country; the second, because return of the communists to power seemed a real risk; and the third, because Putin appeared both reliable and untainted.

These mistakes were not Yeltsin's alone. The West also made big errors. It gave too little assistance at the beginning, when it might have made a difference, and too much later on, when it postponed the financial crisis of 1998, for which Yeltsin and the West were both duly blamed.

Behind Yeltsin's mistakes was a still bigger failure: his infirm grip over government itself. Under his rule, Russian government was more corrupt, incompetent and feeble. A backlash was inevitable. It has taken on traditionally Russian characteristics, through the rebirth of a strong arbitrary state, unchecked by parliamentary or legal restraints presiding over a cowed civil society.

Yeltsin's remarkable story may then be seen as at best a partial success and at worst a gross failure. I would regard it as closer to the former than the latter. The Russia of today is not one a European -- or indeed Russian -- liberal hoped for. But it is surely far better than the Russia of three decades ago. For that Yeltsin deserves much credit.

The story of the ups and downs of Russian reform over the past two decades is not just about political leadership and political ideas, important though they have been. It is also about the impact of the world price of energy on an economy that Stalinist socialism had rendered desperately inefficient.

Economic reform began under Gorbachev, in the old Soviet Union, shortly after the collapse in the price of oil in 1985. It continued through the era of Yeltsin and Putin's first term. It died, as the oil price soared and so export revenue, the current account, foreign exchange reserves and the fiscal position were transformed. The economic boom that resulted has made everything easier for Putin. Between 2002 and 2005, for example, gross domestic product rose by an impressive 22 percent. But, as the Organization for Economic Cooperation and Development notes in its latest economic survey of Russia, "command GDP," which adds the additional benefits of the massive recent rise in Russia's terms of trade (the relative prices of exports to imports), rose by 38 percent.

Russia today is a politically centralized and corrupt petro-state. As long as this continues, reform will remain stalled and the political system centralized and oppressive. That is the lesson not just of Russian, but of worldwide experience.

The price of oil rose too soon in the process of reform, with sad longer-term results. The collapse in oil prices in the 1980s made the reforms necessary, but their current rise makes Putin's regime stable. When (or if) prices fall again, a new leader may dare to complete Yeltsin's task of turning Russia into a modern liberal democracy. We should hope for this outcome, above all for the sake of the Russian people themselves. Then at last we will also be able to say with confidence that, under Yeltsin, a new democratic Russia was born.

Martin Wolf is a columnist for the Financial Times, where this comment appeared.