April 18, 2001 

This Date's Issues:   5208 • 5209 • 5210

Johnson's Russia List
#5210
18 April 2001
davidjohnson@erols.com

******

The Atlantic Monthly
May 2001
Russia Is Finished
The unstoppable descent of a once great power into social catastrophe and
strategic irrelevance
By Jeffrey Tayler
When Jeffrey Tayler settled in Moscow, in 1993, he was optimistic about
Russia's prospects for reform and prosperity. No longer. In this month's
cover story ("Russia Is Finished") Tayler explains how centuries of
political repression and other deeply rooted factors have created a culture
of apathy and corruption that all but ensures Russia's descent into social
chaos and strategic irrelevance. Tayler is the author of Siberian Dawn
(1999) and Facing the Congo (2000). Articles he wrote for The Atlantic are
included in Houghton Mifflin's Best American Travel Writing (2000).


During the Cold War years I perceived Russia through a Cold War prism-as a
land of vast, frozen twilight realms of steppe and forest where a drama was
being acted out that involved players of satanic evil or saintly good and
doctrines that promised either mankind's salvation or its ruin. I developed
a passion for the country, a passion that derived in part from a weighty
postulate: that what happened there concerned not only Russians but the
rest of the world. In its Soviet incarnation Russia had nuclear weapons and
a powerful military, a threatening and subversive ideology, a tendency to
invade its neighbors or meddle in their affairs, and the might to wreak
havoc on other continents. Russians I came to know spoke of the future of
their country as if it would be the fate of humanity, and I agreed with them.

Intrigued by this drama, I set out in 1993, after the Cold War had ended,
to cross Russia, journeying more than 8,000 miles from Magadan, a former
gulag settlement on the Sea of Okhotsk, to Europe. I wrote a book about the
trip. I made Moscow my home. I married a Russian. My life-as much as it can
be, given that I carry an American passport-is Russian. But having devoted
half my life to this country, and having lived through most of its
"transition," I have arrived at a conclusion at odds with what I thought
before: Internal contradictions in Russia's thousand-year history have
destined it to shrink demographically, weaken economically, and, possibly,
disintegrate territorially. The drama is coming to a close, and within a
few decades Russia will concern the rest of the world no more than any
Third World country with abundant resources, an impoverished people, and a
corrupt government. In short, as a Great Power, Russia is finished.

Why this should be so will become apparent during a look back at the past
decade and how its events stemmed from Russia's Eastern Orthodox
civilization and a decimating, isolating, long-ago invasion whose
consequences determine the relation between citizen and state to this day.

October, 1993

Despite the grave images the media show us, the full extent of Russia's
weakness is not apparent to most visitors at first. Trains run on time.
Stores open on schedule. The obvious poverty of shantytowns and slums is
rare. Though rising sharply, street crime is still less common than in
major cities of the West. At times gruff in public, Russians privately
maintain a superb civility and dignity, and their oriental tradition of
hospitality toward strangers puts Westerners to shame. Customs now regarded
as quaint (or sexist) in the West-such as a man's opening doors for a woman
and paying for his date's meals-are the rule, and only the indigent dress
shabbily. Standards of education, especially in math and science, exceed
those of all but a few Western countries; the average Russian high schooler
may have a grasp of U.S. or European history that would humiliate an
American college student. The remnants of the Soviet welfare state ensure
that few starve; the apartments the Soviet government gave to its citizens
make Russia a country of homeowners to a great extent. During the spring
and summer months Russians take to the streets to enjoy the clement
weather; in the endless, magenta-hued dusks of May and June the well-lit
central avenues of Moscow and St. Petersburg resemble fashion runways, with
poised, long-legged beauties strolling arm in arm with their dates. On
street corners, or in pedestrian underpasses during the winter months,
buskers play the balalaika, sing "Kalinka," and chant Eastern Orthodox
hymns. In sum, few visitors find cause for despair, and Armageddon appears
well at bay. Reform and prosperity, it would seem, are a hair's breadth
away, and those who would deny this are shortsighted pessimists.

I, too, thought this way when I arrived in Moscow. In 1993 I was an
optimist. How could one not be, after six years of perestroika, the defeat
of the Communist coup-plotters in 1991, and the innumerable positive
assessments by prominent Westerners, from Presidents to journalists to
economists and investors? The image of Boris Yeltsin mounting a tank in
front of the Supreme Soviet during the attempted coup and announcing, in
his kingly baritone, that Russia would remain free of tyranny retained
perfect clarity in my mind's eye. Moreover, in 1993 Yeltsin had just
prevailed in a national referendum that granted him a mandate to continue
his free-market and democratization reforms. History in Russia was
beginning anew. What needed to be changed would be changed; problems that
needed solving were going to be solved.

One warm afternoon in early October of 1993 I was strolling through the
Kitai-Gorod neighborhood of central Moscow with a young woman by the name
of Lena. An accountant, Lena had cropped flaxen hair and hazel eyes that
radiated purpose; she was well spoken and curious. We talked about
Pushkin's poetry, about the Michael Jackson concert that had just taken
place in Moscow, about which designers were chic in the West, about how she
liked to spend her days off at her parents' dacha. But when our
conversation turned to Russia, a hardness invaded her eyes. I took the
position that Yeltsin would keep the country on the reformist path; she
countered with declarations that "nothing good will ever come of Russia,"
that the truth about what was going on here would never be known, that one
who thought otherwise was naive, and that Russians were, above all, an
unpredictable people, given to wild swings and dangerous extremes, lacking
the patience and adherence to principle that democracy demanded. She
scoffed at forecasts of prosperity and laughed at Westerners, with their
belief in progress, the rule of law, and the goodness of men. I answered
that this would all change, and we argued. But it was a beautiful day, the
poplars stood red and gold in the fresh autumn air, and we soon dropped the
subject. Suddenly we realized that we were almost alone on the streets,
although it was a weekend afternoon. Only the distant sound of sirens broke
the silence.

That evening I arrived home and turned on the television to scenes of
mayhem and carnage in central Moscow. A couple of weeks earlier Yeltsin had
ordered the Supreme Soviet, which opposed him, to disband. The deputies had
refused; they had proclaimed a new government and appointed their own
President. They had locked themselves inside the Soviet; soldiers and
demonstrators had surrounded it; and a standoff had ensued. While Lena and
I were out strolling, some of the demonstrators had broken through the line
of soldiers and set off on a rampage through town, shooting their way to
the main television station, which they attempted without success to take
by force. The next morning Yeltsin ordered tanks into the streets, and I
watched from the bank of the Moscow River as they blasted the white-marble
citadel of the Supreme Soviet into a flaming, blackened shell, as snipers
fired on passersby from rooftops, as crowds ran screaming along the
embankment.

The deputies surrendered that evening, but for the next two weeks the
Kremlin imposed a curfew. From the moment the nightly curfew began, cries
to halt, bursts of gunfire, and screams would echo outside my apartment and
last until dawn. My neighbors and I assumed that the shooting and screaming
had something to do with Ministry of Internal Affairs troops apprehending
curfew violators or hunting down the Chechen guerrillas whom, it was said,
the Chechen speaker of the Supreme Soviet had installed in Moscow, but we
never learned exactly what was going on. There were rumors and more rumors;
the media were biased in Yeltsin's favor and could not be fully trusted.
During the day troops rounded up Chechen and Azerbaijani street traders,
often beating them, seizing their goods and money, and bulldozing their
kiosks before expelling them from Moscow. This they did with the approval
of the mobs that gathered to watch: many saw the dark-skinned Caucasians as
outsiders who stirred up trouble, or as mafiozy.

Reformer or no, Yeltsin had the guns, and he used them. As under the czars
and Stalin, so under Yeltsin-might would prevail in Russia, dialogue would
be drowned out in the rattle of gunfire and blasts of artillery, violence
would be used by the state against those who opposed reforms that were at
least ostensibly for the good of the country. But there was something new
this time: the violence received accolades from Western politicians whom
most Russians had until then viewed as honorable and above the tumult of
Russian politics. Because the West supported the bombardment and sided so
openly with Yeltsin afterward, many saw the West as colluding with Yeltsin
to weaken Russia. From then on Russians began deriding Yeltsin as the
stavlennik ("protégé") or marionetka ("puppet") of the West. Russians' view
of their country, as Lena had expressed it to me, was imbued with pessimism
(which turned out to be justified), fatalism, and an awareness of
irreconcilable traits and historical contradictions. If reform depended on
democracy, and democracy required dialogue and trust, what did it mean that
when faced with one of his first major crises, Yeltsin started shooting at
his adversaries? In short, what had really changed?

The Rule of Lawlessness

The leaders of the October, 1993, uprising were charged with inciting mass
disorder, imprisoned, given amnesty in early 1994, and released,
sufficiently chastised that most have not since participated in national
politics. With his survival at stake, Yeltsin proposed a constitution that
would grant him czarlike powers. A referendum was held, and the
constitution passed into law. Liberal Russians (and I) viewed the
constitution with some alarm. Did Russia really need a new czar? Wasn't an
overly powerful executive branch of government what had always plagued
Russia? But then, Yeltsin had staked his career on defeating the
Communists, who appeared to pose the greatest threat to reform, so we gave
him the benefit of the doubt.

In 1994, in order to stay in Moscow, I took a job as the co-manager of a
Russian-American company that provided physical-protection services to
Western businesses opening up in Russia. (My partner was Russian, a former
deputy chief of the Moscow militia.) If in politics some sort of order had
been restored, in other areas of national life, specifically business and
the economy, a war was being waged-a war that, more than the uprising of
1993, would poison Russia and pervert its course, and of which I would
acquire personal, nerve-shattering knowledge.

One September evening in 1994 I was driving home from work across central
Moscow. The sky was a soup of gray drizzle and black cloud. Traffic was
light; cars drifted past me or I passed them in a swooshing slush of rain
and flying mud. I turned off the Garden Ring Road onto Vtoraya
Tverskaya-Yamskaya Street and pulled up to a traffic light. It was red. I
waited.

About halfway up the next block a man entered a Mercedes parked at the
curb. A few seconds later an explosion tore the car apart and blew out the
windows in the surrounding buildings, and the shock wave hurled pedestrians
to the ground. A column of flame erupted from the vehicle; glass and scraps
of metal tinkled and clanked as they fell to the ground. I jumped out of my
car to look, and then a second, lesser explosion-the Mercedes's gas
tank-scattered shreds of metal within a twenty-yard radius.

A couple of minutes later a militia car arrived, but the officers did
little more than gawk at the burning vehicle. By the time a fire engine had
pulled up, black smoke overhung the street, and the flames shooting from
the wreckage reached into the branches of a tree above. The firemen brought
out a hose and managed to extinguish the blaze with a torrent of white
foam, which spread over the street like dirty snow. Steam resembling winter
fog arose from the burnt car. The blaze out, the firemen threw aside their
hose and pried open the door with a crowbar. The inside of the vehicle was
a skeleton of charred, twisted metal. A few chunks of singed flesh were all
that remained of the man inside.

The radio first reported this as the murder of a prominent actor; then
reports said a banker. It turned out to be the contract killing of a mafiya
boss whose alias was Sylvester.

A great gangland war was on in Russia, and I again heard gunfire in the
night around my apartment. Bankers, businessmen, and innocent bystanders
were being murdered in shootouts, contract hits, and car and apartment
bombings-sometimes at the rate of several a day in Moscow alone. Competing
territorial criminal gangs, many of which operate under the protection of
police and state officials, were establishing their turf, taking over
businesses across Russia, eliminating those who resisted. Government
security services, so powerful under the Soviets, now found themselves
outgunned; they were also vulnerable to corruption, because most officers
and soldiers earned less than $150 a month.

There was nothing subtle, hidden, or surreptitious about the mafiya.
Mafiozy often drove armored Mercedes and BMWs equipped with sirens and
flashing lights and used them to force other cars to the side of the road;
to avoid traffic jams they turned onto the sidewalk, honked, and shot
ahead, sending pedestrians diving out of the way. They gathered at
nightclubs where the cover charges alone could exceed $400; they ordered
cognac at $200 a shot and hookers at $1,000 a session; they dressed in
Versace and Hugo Boss suits; they maintained diamond-clad concubines of
mesmerizing, icy beauty. Outside Moscow they built grand dachas for
themselves, their wives, and their mistresses; they vacationed on the
Riviera and in the Swiss Alps. In a land where honesty was a fault and the
good were always the losers, always the poor, mafiozy became role models
for many of the young, who in at least one survey named "contract killer"
and "hard-currency prostitute" as the professions to which they most
aspired. Money (and guns) made kings-understandably, in view of both
Russia's poverty and the revulsion the young felt for the Soviet dogma of
self-abnegation for the sake of a bright future, which never came. A free
and fair market was an abstract concept; driving a $200,000 armored
Mercedes 600 that could survive a bomb explosion under its chassis was fun.

The mafiozy were richer, cleverer, more lavish, and more aggressive than
the expatriate businessmen arriving in Moscow, lured by Western
journalists' portrayal of Russia as the "Wild East"-a tantalizing but
deceptive catchphrase that implied frontierlike opportunity for all in a
munificent wilderness. When the expatriates discovered that the odds had
been stacked against them, they came to our security firm for protection;
they were frightened, insomniac, at times trembling, and always stunned.
Where was the reforming Russia that would let them get rich while preaching
the gospel of the free market to reverent native subordinates?

The Byzantine nature of Russia's legal environment provides organized crime
with an entrée into businesses by making violations of the law-matters for
blackmail-inevitable, and by leaving entrepreneurs at the mercy of corrupt
bureaucrats and state agencies. It is impossible to operate a business
successfully in Russia and also observe all the laws, because there are too
many contradictory laws. The approximately twenty different levies on the
books would tax a company as much as 105 percent if they were paid;
businesses must evade taxes to at least some extent or go bankrupt. Most
enterprises maintain a secret chornaya kassa (a "black accounting book"
that accurately shows profits and losses) but submit to auditors from the
Tax Inspectorate the belaya bukhgalteriya ("white accounts"-false records
of low profits and high expenses). The auditors themselves are barely
getting by: they work for a commission (a percentage of the taxes they
collect), and may be receptive to bribes, gifts, rented women, and so on.

State agencies other than the Tax Inspectorate suffocate businesses and add
to the mess. Registration, re-registration, and certification with
municipal departments cost enterprises hundreds of employee hours.
Bureaucrats may expedite paperwork for bribes. Unbribed, they may "forget"
or "misplace" one's papers, deny requests, delay decisions, fail to show up
for meetings, or send one back to a lower-level bureaucrat for this or that
document or stamp or signature. Fire, sanitary, and labor inspectors make
frequent and unexpected calls on businesses. If something is not in order,
or the inspectors are not adequately bribed or fêted, they may order the
company closed, seize assets, or arrange for arrests. Legal redress most
often fails: the government rarely loses in court against the accused, and
judges are known to be on the take.

Enter the mafiya. It has been estimated that 80 percent of Russian
businesses pay dan' ("tribute,"or protection money) to a krysha ("roof," or
racket), but the real number is probably higher; one may assume that any
business operating openly has a krysha. (Entrepreneurs providing
clandestine services are less likely to run into trouble.) Mafiozy approach
businesses directly, visiting in groups of three or four; one of them
speaks in a friendly manner, warning directors that they must pay dan'-15
to 20 percent of their company's gross earnings-or suffer violence at the
hands of unnamed gangs. If the mafiozy operate under the guise of a
security agency, they may insist that the director sign a contract-a ruse
that has deceived some businesses into relinquishing control of their bank
accounts. Once a business has acquired a krysha, it must resist the
advances of rival gangs or risk falling prey to razborki-a settling of
scores over territory. If businesses refuse to pay, which is rare now, the
thugs mount an escalating campaign of pressure, starting with verbal
threats, moving on to beating and kidnapping, and ending with well-placed
bullets or the torture of loved ones or a bomb placed by the door of the
businessman's apartment.

If businessmen attempt to conceal revenues from the krysha victimizing
them, they may be exposed by moles the mafiya has placed within their
companies. Often, in return for payment, accountants or secretaries provide
the mob with information about their employers' violations of tax laws. In
any case, a businessman may simply be unable to cope with the mobsters'
demands, which can increase at any time: in addition to regular dan', thugs
may demand "gifts" in the form of SUVs, rented women, or bags of cash.
However, the mafiya can play a useful role in business development: if
competitors with lower prices or better goods appear on the scene, fires,
theft, murder, and other bedlam can be arranged.

In most countries organized crime affects principally illegal trade
(narcotics, prostitution, gambling), but in Russia the mob can take over
any business-not only because most businesses have to break the law to stay
afloat, and thus leave themselves vulnerable to extortion, but also because
so much economic activity takes place in untraceable cash. Although Russian
law requires that a business open a bank account, Russian banks are
notoriously unreliable-failing frequently, closing unexpectedly,
disappearing with their depositors' money, or charging high fees for
irregular services. A business may thus be forced to conduct most of its
transactions in cash. Other Russian financial institutions have proved no
more reliable: investment houses have turned out to be pyramid schemes, and
millions of private investors have lost their life savings when the schemes
collapsed.

A country with a $340 billion economy and no reliable banking system or
financial sector makes a poor investment, to say the least, and capital
flight has become a necessity for many businesses. It is estimated that for
most of the nine years since the fall of the Soviet Union some $2 billion a
month has fled the country for banks in the Caribbean, Switzerland, and
elsewhere. Aid from international lending agencies totaled $66 billion
through 1998; in the mid-1990s roughly $10 billion a year in aid poured
into Russia while at least double that flowed out.

Faced with such danger, disarray, corruption, and deceit (most of which is
well publicized by the Russian media: news shows frequently amount to
chronicles of bribery, death, and dismemberment), Russians have stopped
feeling outrage and have resigned themselves. The murder of an entrepreneur
"as a result of his business activity" (to quote a phrase beloved by
militia press centers) arouses no surprise, only a shrug. The excesses of
mobsters on a Moscow street provoke no indignation, only envy. It is
accepted that the chaos and contradictory laws benefit those in power-that
the state has abandoned its people to the thugs because it is in league
with them. In any case, those in power, be they mafiozy or the government,
have the guns; thoughts of overt resistance are rare.

Oligarchs at the Trough

Small businesses account for less than a tenth of Russia's economy. Most
economic activity-and theft-is conducted by those who have become known as
the oligarchs. Until the collapse of the Russian economy, in August of
1998, the oligarchs, who number around fifteen, garnered praise from many
Western journalists and aid officials as the glamorous magnates of the New
Russia, daring pioneers out to establish a free market that would ensure
the political demise of the Communists. Just as Russia was dubbed the Wild
East, the oligarchs were christened the country's Robber Barons. But the
appellation is misleading: the oligarchs rose to prominence not by building
railroads and industries but by exploiting antiquated pricing systems,
disorganized legal codes, and-most important-Soviet-era connections with
the government. In the early 1990s, in accordance with the economic "shock
therapy" advocated by the West, the state relinquished control over the
ruble and freed prices (which had been held artificially low) on consumer
goods, but maintained more or less fixed prices on oil, gas, timber,
precious metals, and other natural resources. The ruble plunged against the
dollar, and within days the life savings of millions were wiped out.
Absurdities resulted: for example, the one dollar for which a pack of
Marlboros sold in Moscow would buy three tons of crude oil or a trainload
of prime Siberian timber; one could buy a plane ticket and fly halfway
across the country for the cost of a pound of potatoes.

Those-including Boris Berezovsky, Vladimir Potanin, and Mikhail
Khodorkovsky-with ties to the ministries that control natural resources
took advantage of price irregularities to make export deals at astronomical
profits. Thus it was their connections, rather than entrepreneurial
initiative, that made these men wealthy; they used their wealth to buy
influence in the media and the government. Wealth begat wealth and
influence spawned influence. The oligarchs also established banks and
arranged to have them designated conduits of state money, much of
which-including hundreds of millions of dollars that Moscow later allocated
for the rebuilding of Chechnya after the first Chechen war-simply
disappeared. Some oligarchs won tax exemptions from the government (spelled
out in presidential decrees) which allowed them to import alcohol,
cigarettes, and luxury cars duty-free. Tax exemption was eventually
extended to others with ostensibly noble motives: by the mid-1990s the
Russian Orthodox Church and the National Sports Fund were importing
hundreds of millions of dollars' worth of alcohol and cigarettes a year.
This aroused little public anger: people accepted as a given that those in
power would use their positions for aggrandizement.

While the oligarchs were amassing their wealth, most press attention, both
in Russia and abroad, was on the state privatization scheme conceived and
implemented by Anatoly Chubais, the State Property Committee Chairman, and
blessed by Western governments. In 1992 and 1993 the government doled out
vouchers (vauchery) that Russians could use to invest in state enterprises
that were to be put on public auction blocks. Although 41 million Russians
acquired shares in 17,000 enterprises, the scheme amounted to a sham-little
more than a way for the government to divest itself of moribund enterprises
that the Soviet Union had gone bankrupt supporting. The state's most
profitable assets-the oil and precious-metals industries-did not come under
the purview of the initial scheme. Russians quickly understood that they
had been deceived, and vauchery came to mean worthless chits of paper;
privatizatsiya was popularly punned into prikhvatizatsiya (from the verb
prikhvatit'-"to seize or grab").

Although Russia's largest and most valuable company, the natural-gas
enterprise Gazprom (its exact worth is unknown, but estimates have reached
as high as $950 billion), was divided secretly among the state, management,
and unknown investors in the early 1990s, the rest of Russia's energy and
precious-metals industries hit the auction block in late 1995. The
auctions, organized by Anatoly Chubais and hailed as "competitive," were
rigged by those oligarch-owned banks and companies to which Chubais
entrusted them. Large stakes in oil, nickel, and telecommunications
companies were sold at a fraction of their real value to the oligarchs and
their affiliates; significantly higher bids were disqualified on
technicalities. As a result the oligarchs found themselves in control of
Russia's most profitable strategic resource: oil. After Saudi Arabia,
Russia contains the largest oil reserves on earth; it is the third largest
oil producer in the world.

Having acquired these companies for next to nothing, the oligarchs set
about looting them, stripping them of assets for the quickest possible gain
and shipping the profits abroad. Through an elaborate scheme known as
transfer, or corporate pricing, by which a Russia-based subsidiary of an
oil company sells oil to the parent company or to another subsidiary abroad
at an artificially low price (so that the latter can resell a large portion
of the oil at Western-market prices), the oligarchs have since cheated the
state out of billions of dollars of tax revenues a year (roughly $9 billion
last year alone). They have also transferred shares to offshore holding
companies, arranged for the theft of equipment, and embezzled funds.
Russian judges, law-enforcement agents, and state officials who objected to
the looting were intimidated into acquiescence or bought off.

The oil industry, plagued by obsolete and decrepit equipment and deprived
of needed investment, has over the past ten years cut production by 50
percent. To protect their "investments" the oligarchs have been the
staunchest advocates of the status quo: in 1996 they financed Yeltsin's
re-election to the presidency, giving the ailing, boozing leader campaign
funds (thirty times more than election law permitted) and media coverage
that took him from single-digit approval ratings to victory over the
Communist Party candidate Gennady Zyuganov.

As bad as all that sounds, throughout the 1990s in Moscow the standard of
living rose. (Moscow is where most of the oligarchs live; where the banks,
restaurants, shops, medical centers, and travel and service industries that
cater to them are located; and where the greatest share-perhaps 80
percent-of Russia's capital is parked.) The city underwent a glitzy
transformation, in part owing to preparations for its 850th anniversary-an
occasion that might have gone uncelebrated if the mayor, Yuri Luzhkov, had
not been pursuing presidential ambitions. Muscovites working for finance,
oil, and investment companies and earning $5,000 to $20,000 or more a month
constituted the upper class. Many of my well-off friends were spending
their entire salaries on clothes, new apartments, restaurant meals, and
travel abroad. (Profligate spending made sense, because there was no safe
place to save money.) Designer boutiques opened across the city; the
already high numbers of Mercedes, BMWs, and SUVs on the streets increased
further. As the rest of the country slipped into medieval poverty, Moscow
was becoming, at least by superficial measures, a world-class capital.

But the country was nearing collapse. The government and state enterprises
were failing to pay salaries to millions of Russians in the hinterland,
often for months on end-while the directors of those enterprises received
hundreds of millions of dollars in state support, which they presumably
funneled to accounts abroad. International banks and Western economists
ignored evidence of corruption and identified Russia's main problem as
insufficient tax collection. They made loans (totaling roughly $10 billion)
contingent on improved levies. They urged the Russian government to do all
it could to increase its take, and the government complied. Yeltsin's
administration floated the idea of setting up a CheKa (an acronym that
stands for "emergency committee," harking back to Lenin's bloodthirsty
secret-police organ of the same name) to oversee tax collection; it formed
tax-police SWAT teams that began raiding entrepreneurs, often acting on
tips from informers. In cities across the country giant posters appeared
carrying citations from the constitution set against the Russian tricolor,
adjuring citizens to pay taxes or else. For those unmoved by the call to
patriotism or by fear of the tax police, other posters showed teary-eyed
grandmothers pleading with arms outstretched for citizens to pay taxes so
that the old women could receive their pensions.

It didn't work. Most businessmen were (quietly) outraged. They knew that
the payment of taxes by oligarchs and those close to the state was a matter
of negotiation, and that many tax exemptions, though declared annulled in
1995 at the request of the IMF, still functioned. Indeed, the state paid
compensation to certain companies for income lost in the abolition of
exemptions. If they were not operating secretly out of unmarked offices, or
changing locations and names to evade taxes, private enterprises (and even
government agencies, including the Tax Ministry itself) made use of
loopholes in the law which allowed certain kinds of expenses-for insurance,
meals, and so on-to go untaxed, while only income that fell under the
rubric "salary" was taxed. The result, to this day, is that companies pay
perhaps a tenth of their employees' compensation as taxable salary and nine
tenths under various other categories, often in chornyi nal ("black cash").
This proves profitable for employees and employers both. Only the state
loses. But then, no one gives a damn about the state. Why?

"Those government thieves aren't getting any of my money!" summarizes the
feelings of Russians toward taxes and their state. When Russians talk of
their politicians, they frequently speak of "thieves," "bandits," and
"swindlers"-and not hyperbolically: the presence of criminals in the Duma
is a well-publicized fact. (To acquire immunity from prosecution, some of
Russia's most notorious scofflaws have gotten themselves elected to seats
in the legislature.) Russians refer to the state itself as the kormushka,
or "trough." The notion that a politician could be serving his constituents
while dipping his morda ("snout") in the kormushka (whether stealing state
funds or IMF dollars), or that laws written by "bandits" and "swindlers"
could be just or justly applied, or that pigs at the trough and people
coerced into parting with their earnings to fill that trough have anything
in common, is laughable.

The Death of "The Common Good"

The hostility that Russians feel toward their government comes not from
some innate lack of civic duty but from the terror, violence, and deceit
that have since the late Middle Ages characterized the way in which their
rulers have treated them. This repression has roots in a history very
different from that of the West-a history that gave birth to the
civilization of Russian Orthodox Christianity. In 988 the principalities of
Kievan Rus' (the predecessor of Russia, Ukraine, and Belarus) accepted
Christianity from the Byzantine Greeks, rather than from the Romans-a
matter of no small import, given that Byzantium was moribund, its religion
having suffocated the intellectual traditions of the Hellenes. When the
Eastern and Western Churches excommunicated each other and Christendom
divided, in the Great Schism of 1054, the Kievan Russians found themselves
religiously estranged from and in political opposition to Western Europe.
To this day Russians refer to themselves as "Christians" or "Orthodox"
(Pravoslavnye: "those who glorify God in the proper manner") but call
people of Western Christian denominations "Catholics"-a term implying
heresy and harking back to the schism.

The estrangement from Western Europe alone might have been crippling for
Russia's development (assuming that interaction with the West would have
exerted a positive influence), but two centuries after the schism an event
that was permanently to poison citizen-state relations befell the country:
the invasion of Mongol hordes. Sweeping into Kievan Rus' on small, swift
horses, firing arrows of bone that pierced Russian armor, the hordes
pillaged, massacred, and enslaved the Slavic population to such an extent
that most Kievan principalities were knocked out of the history books for
200 years. No comparable calamity befell the West. Mongol rule had the
effect of further isolating Russia; interaction with the West was limited.
Mongol khans, with all their pomp and cruelty, became the figures on which
many Russian rulers would model themselves.

The Kievan Russians believed that God had sent the hordes as punishment for
their impiety-a belief endorsed by the Orthodox Church, which prospered
under Mongol protection. But the princes colluded with their Mongol
overlords, extorting dan' from their subjects for their masters, and saw
the fractiousness that had prevailed among their principalities as having
invited invasion.

Eventually Moscow subjugated other Russian principalities and grew strong
enough to throw off the Mongol yoke. Muscovite czars, Ivan the Terrible
foremost among them, destroyed all institutions that could rival their
power, turning the nobility into servants, enslaving the peasants to the
nobility, and employing Orthodoxy as their official ideology-for Orthodoxy
proclaimed the czar God's chosen representative on earth. The czars
exploited the people to strengthen the state. The Muscovite court adopted
administrative and military practices similar to those of the former Mongol
masters, with symbolism borrowed from the Byzantine Greeks. The concept of
an omnipotent state as a divine bulwark against external heathen threats
became paramount, and was embodied in the absolutism endorsed by the
Orthodox Church.

When Constantinople fell to the Turks, in 1453, Moscow became, in Russian
eyes, the Third Rome (the first was the Rome of the Latins, which had
fallen to the barbarians and was now in the hands of Catholic "heretics";
the second was the Rome of the Greeks, the Byzantine Empire), the sole
standard-bearer for the true faith. Thus, while Europe enjoyed the
Renaissance, the Reformation, and the Enlightenment, Russia, isolated and
infused with a messianic sense of its own superiority over the West,
suffered the predations of rulers bent on building a strong state. It also
expanded in every direction, subsuming territories populated by non-Slavic
ethnic groups, transforming itself from Muscovy into the Russian Empire.
The absolute ruler would permit the development of no civil society that
could mount any opposition. Until the last days of czarism the choice
before the Russian people was either forehead-banging submission to
authority or scythe-swinging revolt. Opposing the czar was tantamount to
defying God; faith and political allegiance were one.

Against this historical backdrop the Bolsheviks came to power, in 1917.
Taking full advantage of Russia's absolutist traditions, Joseph Stalin
followed in the footsteps of Ivan the Terrible and Peter the Great and set
about strengthening the state, enacting programs of industrialization and
agricultural collectivization: he enslaved vast segments of his population
to build industries, mine the earth, and gather crops. Under his direction
the state pillaged its citizens, dispossessing them of land, factories,
homes, and personal wealth, murdering them by the millions in purges
designed to crush potential resistance. Whatever legitimacy the state had
came from its ability to inspire fear while providing the masses with a
modicum of economic security, and from the ideology of Marxism-Leninism,
which, with its themes of universal justice and the eventual triumph of the
working class, accorded well with Russians' messianic view of their
country's place in the world. The state's ability to inspire fear began to
diminish with the death of Stalin; the end of the USSR began with the thaw
of Nikita Khrushchev.

In Soviet days only criminals engaged in commerce for large-scale profit
(the state chief among them: it lived off the sale of oil, gold, and gas to
the West, often extracted from the earth with slave labor). The hypocrisy
of Soviet ideology and the slaughter of the Stalin era deadened respect for
law and order. Crooks became heroes. To get by, the masses improved on
medieval traditions of deceiving the authorities. When the Soviet Union
disintegrated, the last thing that Russians wanted to hear about was a new
set of obligations that were ostensibly to serve the common good. No viable
notion of common good had survived the Soviet decades, when neighbors
betrayed neighbors, children betrayed their parents, and the state enslaved
or murdered its subjects, justifying its actions with words about
patriotism and peace on earth. As long as Russians lived in fear, they
mouthed state slogans and obeyed. When they ceased being afraid, they in
effect told the state, Go to hell.

Putin the Terrible

In New Year's Eve, 1999, Yeltsin resigned and handed over executive power
to his Prime Minister, Vladimir Vladimirovich Putin, a former KGB agent who
had recently served as the head of the KGB's successor agency, the Federal
Security Service, or FSB. Yeltsin and his entourage chose Putin, a relative
unknown, because Putin had the security connections to protect them once
Yeltsin left office; and Putin's first deed as acting President was to sign
a decree granting Yeltsin immunity from prosecution. After nine years of
national impoverishment, privatization scandals, the mafiya takeover of the
business world, the bombardment of the Supreme Soviet, two wars in
Chechnya, and the countrywide entrenchment of corruption (not to mention
the economic collapse of 1998, which the oligarchs and state officials were
rumored to have brought about for their own enrichment), members of the
Yeltsin administration had reason to fear for their liberty and even their
lives. Thus, to save his skin, Yeltsin left the Kremlin in the hands of an
officer of the very agency that had kept the Soviet regime in power through
mass murder, expropriation, exile, torture, surveillance, violation of
individual liberties, blackmail, and lies.

As the former head of the FSB, Putin may well have had damaging
information on all his rivals in the presidential election that was to take
place three months after his appointment. The media reported a groundswell
of support for Putin among the electorate-impossible to measure in real
terms, given the media's obvious bias in his favor, although his stated
intent to restore order in Russia did resonate with many. Most of the other
candidates gave up the race without a fight, and Putin won the election in
the first round. Given that he had come to power on a wave of hysteria
about the war in Chechnya (a war he had launched, albeit in response to the
Chechen invasion of Dagestan) and panic generated by terrorist explosions
that destroyed apartment buildings in several Russian cities (for which, it
was rumored, his associates were responsible), it is tempting to conclude
that his election resulted from a scenario contrived to dupe the Russian
public into choosing a ruler their hated former President had chosen. Even
this scenario, however, failed to arouse much interest or anger: Russians
expect skulduggery from their politicians.

In his addresses to the public, Putin showed that he understood the parlous
condition of his country. Russians, he said, had built only "the carcass of
a civic society"; they failed to obey laws; they were demographically
moving toward becoming a "senile nation." Most tellingly, he praised the
state security organs, including the FSB, for "guard[ing] Russia's national
interests," said Russians were "not ready to abandon traditional dependence
on the state and become self-reliant individuals," and declared that they
wanted "a restoration of a guiding and regulatory role of the state"-words
that left no doubt about his plans.

Since taking office Putin has moved to restore the state. He has set about
strengthening the vertikal' vlasti, the "vertical line of power"-an oblique
way of saying his own authority. Though the President's power was already
czarlike, owing to Yeltsin's constitution, it was not enough for Putin. He
has redrawn Russia's administrative boundaries along the lines of those of
imperial Russia, and in five out of seven of the "new" federal regions he
has put former military or intelligence officers in charge. He has launched
a campaign to oust governors on corruption charges-governors opposed to the
Kremlin, that is. (Corruption serves as a convenient brush with which to
tar opponents. Some estimates say that seven in ten government officials
are corrupt; the real number may be higher. No matter-when it suits the
state, guilt can be manufactured on demand.) He has prosecuted the war in
Chechnya to the point of obliterating that republic.

Putin needs pliant and adoring media to ensure an absolutist rule. He has
stood behind a proposed "informational security doctrine" that would ban
any foreign ownership of media in Russia as a "threat to national
security." Some in the State Security Council have opposed the bill,
because they believe that Russian journalists are "just as dangerous"; so
now there is talk of imposing restrictions on Russian reporters, too. Putin
has referred to those who write news unfavorable to the state as
"traitors." He has put a KGB veteran in charge of the telecommunications
industry. Journalists in the provinces continue to suffer the intimidation
and beatings (or worse) that they knew in Yeltsin's years, and similar
repression has begun to reach the capital. Last summer the prosecutor
general's office moved to indict the oligarch Vladimir Gusinsky, the head
of Media-Most, which owns Russia's last independent television network, on
charges of fraud. The charges may prove true, but given the widespread
theft practiced by other oligarchs, pursuing Gusinsky, whose network has
voiced strong opposition to Putin's war in Chechnya, amounts to selective
prosecution.

For the first time since Soviet days slavishly adoring chronicles of the
country's leader have hit the stands in some cities. Putin supported the
reinstatement of a slightly modified version of Stalin's national anthem,
which had been discarded by Yeltsin. Although Putin is a leader with an
"unclear" commitment to democracy in the eyes of many in Western political
and media circles, his KGB past speaks volumes to Russians. The sole
national-level politician who still advocates Western ideals and democracy,
Grigory Yavlinsky, has called the situation with respect to the media and
freedom "the worst period in the last ten years." The Soviet atmosphere of
suspicion and fear is returning to Russia. The very knowledge that a former
KGB agent is running the country sends chills down the spine.

Or down some spines. As with Yeltsin, so with Putin: tax collection is
state priority No. 1. To fear or not to fear is a question that hinges on
whether a Russian has made enough money to dread Putin's tax pillagers or
is poor and dispossessed enough to feel spiteful glee when masked tax men
break down a wealthy neighbor's door, kick him and his wife to the floor,
ransack their belongings, and make off with their passports and financial
documents. Yet Russians still steadfastly refuse to file personal tax
returns, and businesses continue to flout tax laws (though now perhaps with
newfound fear and plans to legalize their affairs in the future). There is
talk of granting the tax police ministerial status. Their deeds are
glorified in TV police dramas modeled after Cops, and a special academy has
been set up to train youngsters for a future in tax collecting-a profession
that may be edging out contract killer in popularity among teenagers, with
its scope for material gain and license to employ violence against "enemies
of the people." And as if the new role of the tax police weren't glorious
enough, the Orthodox Church has assigned them a patron saint, thereby
investing them with a divine right to plunder. Those who have made money,
including the oligarchs, understand that in still largely communalist
Russia, property rights are not only not inviolate but could be reversed
with cheers from the masses. Gusinsky and Boris Berezovsky grasped this and
have fled abroad rather than risk litigation and imprisonment; many others
who have made fortunes have done the same or are plotting to do so.
Oligarchs who suffer dispossession will likely see their property either
divided among members of Putin's court or renationalized. The notion that
any redistribution of wealth will be fair and just is nonsensical in light
of recent history: if redistribution takes place, it will favor those in
power.

Average Russians continue to suffer abuse daily at the hands of the
militia, the traffic police, and corrupt bureaucrats. The state may try
them more than once for a crime. They may be detained without charges for
seventy-two hours or held in a tuberculosis-ridden pre-trial detention
center for years. Opening a business involves as much paperwork and bribery
as ever. The mafiya still extracts dan' from entrepreneurs. The countrywide
decay that began during the Yeltsin years continues, with television towers
catching fire, nuclear submarines sinking, military aircraft crashing to
earth, apartment buildings exploding from leaks in decrepit gas pipes, and
entire regions of the country going without heat and electricity in winter
months. Thirty-six percent of the population, or 52 million people, live
below the subsistence level, set at a dollar a day. (Putin's promised
increase in the minimum monthly wage has added $1.79, for a total of
$4.74.) The military, despite Putin's pledges to reform it, remains one of
the most impoverished segments of society: more than 49 percent of military
families live below the poverty line; two thirds of junior officers have no
housing; and officers' salaries have declined in real terms by more than 50
percent over the past five years. Putin's actions show his failure to
understand that it is the dying economy, not the deteriorated state, that
threatens stability and the future of the country. Economic distress and
doctrinaire intransigence brought about the fall of the Soviet Union, and
they may bring about the fall of Russia: Putin has pledged to restore a
"comprehensive system of state regulation of the economy."

Adequate financing of the state sector of the economy would, it appears,
require renationalization of the energy industries that were given away at
the rigged auctions of 1995. But at least for now Putin has forsworn
confrontation and has reached an agreement with most of the oligarchs that
will allow them to keep their spoils-a compromise that shows where his
interests lie. Buoyed by high world oil prices, the oil industry is still
the engine of the economy: it provides a third of all state revenues
(despite persistent tax arrears). This lends a shine to Russia's fiscal
visage that has prompted some Western observers to irrational exuberance
and predictions of a new boom. (Russians, however, now more than ever,
prefer to send their capital abroad; since Putin took office, capital
flight has increased by 30 percent.) Westerners are right about the energy
sector, at least: the Russian government is negotiating a deal with the
European Union that would double fuel exports to Europe and assure Western
investment in leaking pipelines and decrepit rigs.

Humiliation in Uniform

One of the most spectacular elements of the Soviet Union's collapse has
been Russia's fall from military superpower No. 2 to a country whose army
can be neutralized by bands of irregulars fighting with little more than
the weapons on their backs. The decay of the military, resulting from
decreased funding and the spread of corruption (both of which Yeltsin
abetted: he had no interest in maintaining or strengthening an institution
that was at best lukewarm toward his rule), was popularly perceived to have
led to Russia's humiliating defeat during the first Chechen war, in
1994-1996. Putin promised that if he was elected to the presidency, he
would champion the interests of the armed forces and the security services,
and those groups overwhelmingly supported his candidacy. Widespread anger
at the expansion of NATO-and most of all at NATO's war against (Orthodox
Christian) Yugoslavia, in 1999-played a crucial role in Putin's popularity
with the public, because superpower status is fundamental to the Russian
national identity, which retains much of its messianic character. The
notion that Russia's path will always remain separate from that of the West
has survived the Gorbachev and Yeltsin years. To be a superpower-and,
indeed, to maintain the integrity of the Russian Federation (an entity
built, over the course of five centuries, through the conquest and
annexation of non-Russian peoples)-a powerful military is indispensable. So
what of Russia's armed forces today?

To understand the present condition of the Russian military, and the
problems facing the Russian state as a whole, we must examine what lies
behind the war in Chechnya. Although it has generated much criticism in
human-rights circles (particularly in Western Europe), the war has given
rise to relatively little public discontent in Russia, where the conflict
is seen as a battle for the Russian Federation. Should the Chechens win
independence, they would acquire a segment of the oil pipeline that runs
from the Caspian Sea across their territory to Novorossiysk, on the Black
Sea. Furthermore, other restive, partly Muslim regions of the federation,
from republics in the Caucasus to oil-rich Tatarstan and Bashkortostan,
might be tempted to secede.

Getting the lion's share of Caspian oil reserves ranks as one of the
Kremlin's principal domestic and foreign-policy objectives. When Chechen
guerrillas invaded the neighboring republic of Dagestan, in 1999, they
threatened not only Russia's position on the Caspian Sea but also its
alliance with and military bases in Georgia and Armenia-bases Russia needs
in order to stymie efforts by Turkey and the West to erode its hegemony in
the region. In view of these international implications, it makes sense
that Moscow has chosen to emphasize the role played by foreign (mostly
Muslim) governments and mercenaries in the Chechen conflict.

Since federal forces reinvaded Chechnya and established a measure of
control over its northern lowlands, capital, and main cities, Putin has
asserted that the military is conducting not a war but a (largely
successful) "anti-terrorist operation" against band-formirovaniya ("bandit
units"). The result, he maintains, will be a political solution involving
the reincorporation of Chechnya into Russia. Media coverage has for the
most part been restricted to positive accounts of battles won and children
saved, but state television also reports much that does not suggest a sunny
return of Kremlin rule: frequent Chechen attacks on Russian forces all over
the republic, some of them causing dozens of casualties; Chechen
guerrillas' murdering with impunity compatriots who collaborate with
Russian authorities; and savage incidents of banditry and kidnapping-not
only by the rebels. Russian troops have kidnapped Chechens for ransom;
Russian soldiers have sold their weapons to guerrillas in return for cash
or narcotics; and the torture of detainees in federal detention centers is
routine. All of this has prompted Putin to visit Chechnya and to scold
military commanders, including the Minister of Defense, for their
incompetence and unprofessionalism. But the war goes on, with no end in
sight, and atrocities on both sides continue.

Putin has promised to improve the military through much publicized reforms.
Last September the Ministry of Defense announced plans to cut its forces by
almost a third, from 1.2 million men to 850,000-a measure that would
purportedly allow for a leaner, meaner, and better-paid fighting force and
would free up funds for the building of ten new Topol-M ICBMs, Russia's
most lethal nuclear missiles. Yet within two weeks an official of the State
Security Council announced that troop numbers were in fact still at
Soviet-era levels, totaling more than two million servicemen, with another
966,000 in civilian support staff. This declaration exposed the sham of
Russia's demilitarization during the Yeltsin years and made a cut of
350,000 men seem insignificant.

Thus it is unclear where the issue of military reform stands. But the
blood, gore, and corruption in Chechnya are a reminder that no matter what
the numbers are, a band of rebels has managed to tie down the army of what
was once the world's second superpower.

Russia's superpower ambitions contrast with its abysmal domestic failures,
both military and economic; Putin's promise to fulfill those ambitions
bespeaks the same sort of crippling policy confusion that characterized the
Yeltsin era. But no matter how much its army deteriorates, Russia is likely
to maintain a nuclear arsenal sufficiently strong to keep nato from ever
launching a "humanitarian" war on its soil. And the ruin that Russian
forces have wrought on Chechnya has shown what Moscow is willing to do to
keep Russia intact.

Zaire With Permafrost

What does the future hold for Russia? It was Ivan the Terrible's reign that
first made the Kremlin's power synonymous with the rapine and exploitation
of the Russian people. Five centuries of pillaging by the state have meant
that Russians expect repression, and only seek to lessen its impact or
evade it through stealth. But since the Gorbachev years Russians have taken
steps toward reassessing their history and government, have followed
politics and voted in the most-open elections they have known, and have
enjoyed newfound freedoms of expression, assembly, comportment, and travel.
Nevertheless, history suggests that a powerful state, of the sort that
Russians have built in the past, would put an end to all that and guarantee
corruption, abuse of power, violence, curtailment of liberties, and
instability. Now is not the time to resuscitate ideas that brought the
country to near collapse in 1991. Putin's plans to strengthen the state (at
least as he envisions it), if carried out, would amount to a national death
sentence. Yet the weakened state that existed under Yeltsin left the
population prey to the mafiya and corrupt bureaucrats. Given the logic and
propensities of Russian history, there appears to be no end in sight to the
country's decay.

Meanwhile, much of Moscow's political elite still views Russia as having a
Great Power role to play vis-à-vis the United States-a role that, more than
economic reform, seems to captivate the Kremlin. (Under both Yeltsin and
Putin, Russia has striven to counter the United States by courting
alliances with China and India, selling arms and nuclear technology to
Iran, and supporting or at least dealing with Iraq, Serbia, North Korea,
and Cuba.) Superpower ambitions are inevitable, because Russian
civilization and identity are buttressed by a vast and isolating territory,
abundant natural resources, and scientific and military capabilities that
include nuclear weapons. In view of the ailing economy-Russia's gross
national product today amounts to just four percent of the United States'
GNP-these pretensions are fraught with danger, and Putin would do well to
recall that high defense spending helped to bring about the demise of the
Soviet Union. Nevertheless, Putin has declared that he will increase the
military budget to "respond to new geopolitical realities, both external
and internal threats." (The budget for last year included a seven percent
increase, and Putin has pledged to raise it by 57 percent eventually.) As
the state grows stronger, it will once again rob the people to pay the
bills. Thus policies aimed at the revival of the state and the pursuance of
Great Power ambitions promise only further suffering, exploitation, and decay.

For those who remain. Over the past decade Russia's population has been
shrinking by almost a million a year, owing to a plummeting birth rate and
a rising number of deaths from alcoholism and violence. Predictions are
astonishingly grave: the country could lose a third of its population (now
146 million) by the middle of the century. This does not factor in new
scourges-tuberculosis and HIV, in particular, which have been spreading
exponentially since 1998. As its population shrinks, Russia will find
itself less and less able to face demographic challenges from China.
Overpopulation is pushing the Chinese into the Russian Far East-a trend
that at present benefits Russia by bringing it trade and small-scale
investment but that could someday lead to ethnically based separatism.

Although the Kremlin's superpower pretensions may preclude it from
becoming a loyal partner of the West, the country's economic failings, to
say nothing of its shrinking population, will eventually prevent Russia
from posing a significant threat abroad. Given that Russia is surviving on
human, material, and military reserves accrued during the Soviet years, and
that Putin has put forward plans that will only worsen his country's
plight, we can draw but one conclusion: Russia is following the path of
Mobutu's Zaire, becoming a sparsely populated yet gigantic land of natural
resources exploited by an authoritarian elite as the citizenry sinks into
poverty, disease, and despair.

What does this mean for the West? It is difficult to imagine the birth of
an ideological conflict between Russia and the West similar to that which
led to the Cold War-though Russian nationalist sentiments are likely to
increase, and to find expression in ever-more-bellicose pronouncements from
the Kremlin, especially if the West and NATO persist in humiliating Moscow
with military adventures in its former spheres of influence. Otherwise, to
the benefit of the Russian elite, Western businesses will continue to
operate in the havens of Moscow and St. Petersburg, where investment, both
Russian and foreign, will ensure a well-maintained infrastructure. As
regions deteriorate, these two cities are likely to continue developing and
growing: Moscow's population officially stands at nine million but may
actually be as high as 12 million. Western governments will continue to buy
cheap Russian oil and gas, and will quite possibly invest heavily in the
upkeep of those industries. And as for superpower status, in contrast to
the Turks under Kemal Atatürk, who voluntarily relinquished their empire in
favor of an Anatolian homeland, or the Byzantine Greeks, who fell in battle
defending their empire against the Turks, the Russians are likely to face a
long, slow, relatively peaceful decline into obscurity-a process that is
well under way.

********

CDI Russia Weekly:  http://www.cdi.org/russia

Johnson's Russia List Archive (under construction):  http://www.cdi.org/russia/johnson