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Opportunities and risks for democratisation in today's Russia

Grigory Yavlinsky's speech at the seminar on politics in Russia organised by the Liberal, Democrat and Reformers' Group of the Parliamentary Assembly of the Council of Europe

June 22, 1997

Thank you very much Mr Chairman, thank you very much ladies and gentlemen. It's a great pleasure for me once again to speak to you. First of all I want to say from which angle I am going to speak: the Liberal party in Russia, the Yabloko party, is a party which since 1993 has taken part three times in the elections. We were the winners in the elections in 1993, again in 1995, and then we also took part in the Presidential elections. About 10 million people voted for us in the Presidential elections and the ideas which I want to express to you now are the ideas and the feelings held by the people, by a lot of people in Russia. During the Presidential elections, we had a chance to present our ideas and the main slogan of the Presidential elections was a very short word: "Freedom". That was the slogan of our Presidential elections and people gave us a vote, a positive vote in all 98,000 polling stations in Russia. There is not one polling station in Russia which gave us zero. Somewhere we had 2 percent, sometimes we had 45 percent and even in one of the largest cities of Russia like St Petersburg, we got through to the second round. I was a candidate in the second round in St Petersburg and also in 10 cities around Russia. Now from that standpoint, I am going to speak to you and to express some thoughts about what is going on in Russia and what the main problems are:

First of all, I want to say the presesentation made by Alexander Rahr at the beginning of our seminar was very interesting regarding the things that are going on in Russia, but I want to say that generally speaking I disagree with the opinions expressed here. The main question for me is why, why at the worst is such a vision so wide spread as was presented in our seminar? This is why I think it is extremely valuable that this position was so sophisticated and so generously explained to us, it's maybe the main stimulating motive for this discussion, which it certainly is for me. I would start from the standpoint with this explanation for example: that if all that we heard here is right about the reformers' government, the government of the young reformers, the positive signs coming from the side of the President, the new positive attitude to the former Soviet Union Republics, the democratic processes in Russia, the 3 years time limit for positive things to happen, then one very small question: "What for example was the reason, or what was the necessity of the NATO expansion?" And the answer which in which is so well understood in our respective societies is that the main reasons for NATO expansion were Russian internal problems. We think that NATO expansion happened because we had a war that lasted some 2 years, which killed a 100,000 people in Russia; that NATO expansion happened because our military collapsed; that NATO expansion happened because our economic reforms failed; that NATO expansion happened because we have an unpredictable government, an unpredictable President and so many criminals surrounding the President. These are the main reasons why we think that the western leaders took this dramatic decision. But the important problem for us is that this was never openly discussed. The western leaders always came to Russia saying "Mr Yeltsin, what are you doing here?" Mr Yeltsin replies he is making reforms. "What kind of reforms?" "Radical ones." "Oh, congratulations, Mr Yeltsin." Kisses, embracing, shaking hands and that's it. But when it comes to a serious problem like security and NATO expansion, things changed because this is something which touches the vital interests of the people. What it means is that we feel, and we understand, that the majority of the western leaders and the majority of the western political elite believe that Russia is a second-hand democracy. This is a widespread feeling. When the people think that Russia is a special sort of country, an Euro-Asian country with many difficulties in its history, many things of this nature, that the people there don't understand democracy, they don't understand this or that, and so on and so on, and so forth, - then all of these arguments give the west the feeling that this is a kind of a country which quite simply has to be kept in order. Because the progress towards creating a real democracy in Russia seems to them to be extremely problematic. That is why they do not say all these things openly, and also why we in the west we always have such a picture of Russia. We had this picture in 1992, 1993, 1994, and 1995. Sometimes, when I am just reading the western press and listening to the western experts, I have the feeling they are saying things which are absolutely different from what is really going on in my country. This is simply a different story about a different country.

Why is this so? First of all, because the general thinking in the west is that, as we understand that democracy in Russia is something different from democracy in western Europe, then it cannot be the same as democracy as we have here. A second reason is certainly to do with deep and wide-spreaded political investments in Russia, in the Russian transformation process. A lot of western leaders have stakes in Russian political success. They have political stakes in Russian success, in Russian transformation. A lot of talk, a lot of promises, a lot of speeches about Russian transformation and that's why they prefer to use Russia as a positive example of this process. And they try to take away any reservations or criticisms about what is going on in Russia, for example. In this is included a lot of societies and funds and many, many people who are investing their political knowledge in what is going on in Russia, and this creates a special sort of picture. I am not just talking about financial investments, which are very active in Russia right now - and that is the third reason why very often we only get such a very special view of what is going on in Russia.

What is the result of such an approach? The negative result of such an approach I would say, and here I want to refer to the extremely interesting presentation by Mr Yakovlev, is the difficulties involved in losing the credit or the trust - which the Russians feel - towards what the west is saying about their country Russia. In 1991, there was unlimited trust towards the western political system, western culture and ideas. Now things have changed and this change is because of the gap between what is going on in the country and how it is presented from the viewpoint of the western leaders. For example, there was a good question to Mr Yakovlev as to what he would do if he were Mr Clinton. I am not prepared right now to say everything that Mr Clinton should do in his life - maybe his wife will tell him - but one thing about my country which I am prepared to say is what we expect of Mr Clinton when he comes to Russia and he should say this:

« Men and women, ladies and gentlemen, we understand what is going on here. We Americans know what employment means, we Amercians know what economic crisis means, we understand what extremely high inflation means, we understand only too well what corruption means, and criminality; we understand all these problems. We understand all the problems with the old Soviet monopolies, with the oil, gas barons and so on. We encounter those difficulties and it was very hard and tough job for us too . And now we understand the problems you are facing and we are with you. We are ready to help you and we know what kind of advice we can give to you." and so on. Such a speech would give to our people a feeling and understanding of the American people, which would mean much more than the general clapping of hands and saying what great, radical reforms, congratulations! To a government which absolutely has no confidence in the country. You would not be able to find one single person on the street who could say he has confidence in the government as a whole, in its policies, its future economic success, or whatever.

When we were talking just now about such extremely important topics as a pro-western government, which is what we have just now, I would like to explain my view on this: I mean by this that a pro-western government is a pro-Russian government, and that life in Russia would be much better, and we would have more positive results, if we were to take the western model as the basic model for our economy. And by the way, that taking a western model as a basic model for our political system, would also be the best for the progress and the direction of the Russian people and the Russian government. This would be the main sign. And major co-operation with the west would mean that the people should have real confidence in relations with the west and have a positive attitude to what is going on in the west and co-operate in political and economic areas. That is what I think are the main directions in establishing the real, positive relations between Russia and the west.

Now, I am going to mention a few economic problems which we are experiencing at the moment, in order to explain what problems are faced by our government and what is the problem with the government as a whole. To be precise, I would say that the main problem of economic transformation in Russia is that as result of so many different reasons, - including historical ones - the policies of our government are resulting in economic reforms which are creating in Russia an oligarchic, semi-criminal type of economic system. Maybe some of them say, that is for instance sometimes Anatolii Chubais says privately, that this is a kind of a southern Asian model with its big corporations and big monopolistic groups - which some people think would work in Russia. Sometimes to generalise I say that this is a robber-capitalism system. If you were to look at our economic system just now, you would see all the signs and features of the robber-capitalism system. What are the main characteristics of this system? First of all, I would like to say that the starting point of this system, its roots, is the economic system of the Soviet Union. This system has certainly remained place as regards many, many basic things such as monopolies, structures in industry and the overall structure of the Russian economy.

What are the main directions which are called for by our Reformers' government and cited as being the main advantages? Privatisation: if we had privatisation, wide-spread voucher privatisation as was brought about by Mr Chubais. Now to everyone who knows economics at least just a little bit, then it must be clear: this was privatisation and there was no bankruptcy. Can you imagine such a sort of privatisation? It was just a change of titles. Privatisation took place with out any change of management. The main plants with 200,000 workers, 100,000 workers, have the same management now as they had under the Soviet system. No bankruptcy, no change of management - and as a consequence, no investments. This is absolutely evident. Secondly "advantage" number two: we limited inflation. Well, this is true but please don't forget, millions of the people were simply not paid. This was underlined in the previous speech: not once for some one to two years were the people paid, not because they are not paid because for their businesses - they have no businesses. They are military and should be paid by the government. This involves the police, the judiciary system, the medical system, the security systems - but such ways to halt inflation, are no big tricks. No money equals no inflation. No inflation equals no population. So it is a direct way of saying no population, no inflation - this is the formula, and it is easy. If 60 percent of the enterprises are not paying taxes, you have no inflation simply because they are not paying the workers. And the government has a 70 trillion debt, about 12 billion, and the debt is simply: the pensions and salaries. This is an extremely difficult situation. It means we have unemployment which the government does not want to recognise. I am in favour of keeping inflation very low but in this case, it is necessary to openly say we have about 20 percent unemployment - every fifth - and there is no one single programme in the government to combat such a type of unemployment. Monopolies like Gazprom company producing weapons, the monopolies on electricity, railway companies and the such, still exist. This is the standing point: the reason why I was saying that the communists and then Zhirinovsky, let's take the communists first of all, why they are at the present time the main friends of the government: quite simply because for them the situation is apparent: until the monopolies, the largest in the world, are all in place, the communists will always have the opportunity to be in power because they can change everything in the country using five or six officers - because these things are the core system of the Russian economy.

The private property is another main question and here I once again agree with what Mr Yakovlev says. I want to underline that private property rights have not yet been implemented in Russia. The voucher privatisation was in fact a collectivisation of Russian industrial enterprises, not the private property question. Competition is simply not part of the Russian economic system - but as you know, the theory of market economy is that effective market economy can only come from 2, and not one, from 2 basic starting points: private property and competition. In Russia, there is no competition: there is no competition in social life, there is no competition in economic life, and the government and Yeltsin himself are trying to abolish competition even in political life. This is the situation we have. So, what we have as the current situation right now is that the government collects just half of the taxes, and this is why the budget collapsed. In April, the budget completely collapsed for the simple reason that the government could not collect the taxes - they can only collect 50 percent of the taxes. This is the situation with our government and here I want to explain that it is the same old policies as before. The only one new person in government is Boris Nemtsov, but he has only been there for three months. Basically it is the same government as before, with the same policies which bring us to that old familiar situation in general.

The other problem which I think is problem number one or two maybe, I don't know which, is corruption. According to some German experts who made a study about the level of corruption last year in 1996, and drew up a list of corrupt economies and corrupt countries, there are some 57 countries implicated. The less corrupt country is number one, the most corrupt country is number 54. Number 54 is Nigeria, and in this study Russia is classed 47. Bolivia is 36, Columbia is 44. Russia is 47. Corruption is such a disease that it changes all kinds of political or economic initiatives. I think that corruption was one of the main reasons for the Chechen war by the way. And there is no visible sign up until today that we are really doing anything to fight corruption. The main advantage of the new government is that they are at least talking about fighting corruption. They are speaking about it now, whereas half a year ago, they weren't even doing that. Now they are saying such things - for example, Yeltsin said to our country that there are 2 people who do not take bribes: himself and Mr Nemtsov. This was his statement, and it was very amusing! But that is all that has been spoken right now, the mere beginnings of talk about corruption, but it is not a real fight against it.

Now, what does all this mean? It means that we are creating a suppressive economic system. It is an economic system for a small group of people who are barons in the energy sector and some other sectors, which represent the clans and very strong five to seven monopolistic groups. What are the results of this economic policy? The results of this economic policy are that in 1996, there was a decline in investments, by 18 percent. Decline in GDP, by 6 percent. Decline in industrial production, by 8 percent, and so on. These are the results of such a policy. The other result of this policy is the current collapse of the budget and the inability of the government to collect taxes. The last point here is what are the main worries? Certainly all of those people are very close to me personally; they are my friends and we are very close. I am very close to my friend himself but not maybe so close to Mr Chubais - but what is the problem with this new government? From my point of view - and I can prove it - the problem is that the new government has no programme which would be effective in overcoming these difficulties. That means that the crisis is a very serious one, and here I want to use what Ludwig Erhard said about such situations: he said that you cannot improve the economy, nor overcome the crisis if you are faced with have two situations: firstly if the government does not know what to do; and secondly if you have a lot of criminals in the government. From my point of view, this sums up 100 percent the situation we have in Russia at the moment and is the main problem. There is a lot of talk about different steps for the government should take and programmes to follow, but they are not operating them.

Now I have come to the main issue of my presentation: this is the problems of democracy, chances for democracy. First of all as a starting point, I would like to say that robber-capitalism is not equal to democracy. It is necessary to perceive the differences between these two concepts: an open society, European values and human rights are not the same as robber capitalism. They are two quite different things. That is why it is so difficult to understand in Russia right now who are the reformers and who are not reformers. The Russian political system from this point of view is split into two parts: the people who think that the kind of capitalism they are creating is the same as the western model, that is an open society or that they would create an open society sooner or later; the other part of the democrats think that we have to start to doing this right now, that we have no chance of creating a real democratic country, and that we would go in the direction of criminalisation, the direction of the oligarchical, monopolistic state. First of all, I want to say that from our point of view there is no opportunity to go backwards, there is no threat that Russia will become a communist country again. I do not see any scope whatsoever for that. Russia will never become the communist country it was in previous times. This is impossible. With this threat out of the way, we overcome one problem but face new ones, which from my point of view are no less of a problem than communism was. Certainly as a result of this economic situation, we have a very strong nationalistic autocracy which has representatives in the Russian political élite, among Russian politicians and leaders, people which are always ready to be leaders of such nationalistic movements and which can be very strong. Secondly, another threat to our democracy is criminal dictatorship, the dictatorship of the criminal elements. And the third threat is the attempt to create some kind of Russian Pinochet. That's the person our young reformers like very much as an example. They cannot even imagine what Pinochet would mean in Russia, or what the differences are between that event and the events we have in Russia. All these three issues are a real threat to Russian democracy, but they are not the threats to robber-capitalism which we have in the country. That is why this situation in general is rather dangerous.

Now I want to use this opportunity to express that the main political freedoms that Russian people have, which they were given during the Gorbachev era with the firm help of Mr Yakovlev at that time. Since 1991, we have changed a lot of things but there are no additional political developments in this general direction. So the main task for us is to make sure at least that we do not lose the freedoms which we gained some six or seven years ago. That is the situation which we are in. How do these threats to the system come about? This can happen as a result of the criminialisation of our economy and the failures in economic policy. We have an extremely autocratic constitution in which the President has unlimited possibilities and unlimited rights and this creates two situations: first of all, it creates such situations as the Chechen war and secondly, it creates extreme weakness of power - because having such great responsabilities, the President cannot use them in the right way and so different shadow people surrounding him take this power and make considerable use of it. This creates the criminal environment. The key issue is that we have no civil society as of present. That is what I want to stress: we were making reforms all this time in the economy, many things were done but I can safely say that there were no real steps or moves made to create civil society whatsoever. When I think about Russian reforms, I think that creating a new life in Russia is a process of reforms and looks something like a bicycle: economic reform, political reform. Economic changes, civil society changes; and certainly what are the most important elements for my country are the middle-classes, small businesses, middle businesses, access to the resources and the property of the dozens of millions of people - that is what is not happening in going towards the creation of capitalism in Russia, and this is very dangerous. This is why the government has no social base and as long as they do not have this, they will always have to make deals with the communists and nationalists - and they are paying a lot to the communists and nationalists. So what you see in Russia just now is an historical process: how the government, in order to find some support in the parliament, has for instance to literally pay the communists and nationalists to pass a vote. And in this way, the government is developing such forces as will finally stop any reforms if these parties were also to come to power.

So what are the main directions? The main directions are certainly the anti-criminal policies, changes in economic policies, liberal changes in the tax system, regulations, competition, real property rights - civil society issues which the government is absolutely giving no attention to, nor are the President or the Prime Minister. Division of power, federation, these are the main things that must be addressed but are topic which are not on the agenda of the current government, nor on the agenda of our President. What are the consequences of all this? Here I want to say that it is a well-known, even a banal idea that it stems from a Romanticism of relations between Russia and the United States, and so on and so forth. And I think that our vital interests coincide right now, even more than before, much more even. I will try to prove this now: Russia as a result of these issues makes threats which from my point of view are no less than before, indeed are more so - and hence more dangerous. First, as a result of the values of economic reform and as a result of oligarchic government (not a public but oligarchic one), which is extremely greedy, we are losing control of many nuclear key issues. Maybe you are aware of the suicide last autumn of the director of the Federal Thermal Nuclear Centre of Russia. He wrote a note, which was later stolen by the KGB, in which he said that he could no longer guarantee security, that he had received no finance for three years. And this is for a Centre which has been producing thermal nuclear weapons since 1958 ! It is a special city which is not on the map, 50,000 people work there and so on. He continued in the letter that he had paid only 50 dollars to the people who were working there in the last 6 months. He could not continue like this any more. If you think something has changed there today, you are mistaken. This is a real threat: if all this were to go out of control, we would be treated to have a very, very nice entertainment, and that means all of us. Secondly, last year from the arms depots of the Russian military, 160,000 guns were stolen - can you imagine that !? So I want to underline and stress that these are the pre-conditions for international terrorism - not just military threats, but also for international terrorism. Thirdly, concerning ecological problems, when we read in our newspapers that the staff at the St Petersburg's nuclear power-station have not been paid for 6 months and have gone on strike, then I think about all these people suffering from starvation who are regulating the nuclear power-stations and this gives me a very bad feeling. And this is what actually happened just several months ago ! These three things are much more important than the possible military threat that NATO expansion may mean. What is needed is a new kind of co-operation, and new forms of mutual understanding because what is going on just now in Russia, from this point of view, creates interests which I personally think are closer to Europe than even before. That is why I think such co-operation is so important - these issues must be given priority.

Now, I want to say a few words about the Council of Europe: as far as I understand it the main values of the Council of Europe, where I am privileged to be making this presentation, are pluralistic democracy, rule of law and human rights. I would like to say that these are not yet the basic values for Russia. That is why I had so many reservations when Russia became a member - I want my country to be a member, I want this very much, but I want Russia to be an equal member. Not simply equal on a formal basis, but equal from the point of view that in my country, these values should really be the basic starting-points for internal policy in Russia. And this is not the case, nor are such discussions even beginning yet. I think that the Council of Europe cannot remain uninvolved in so far as Russia is a member. This is not simply an internal affair for Russia. It is not just an issue that Russia is not meeting the main conditions of adhesion to the Council of Europe - you are aware of the many conditions that Russia has to meet - but it is also an explanation of the attitude of the Russian people, and I mean all the country, to the Council of Europe - to Europe - an attitude which is still held in high esteem. And respect is very high and so every word which reaches the people in Russia is respected. This is why every step made here towards Russia is important for Russians. I do not believe - because I simply know by my own political experience: I am campaigning all over the country; every month, two or three times I go around the country and am able to speak to the people everywhere in the country - I know that respect is very high and that interest is very keen. That is why if every decision which is taken concerning Russia were to reach the Russian people, which is not always the case, then this would be treated with high respect. That is why I am discussing here everything including the Belorussian issue, the issue of which direction Russia should go in - for example, you have the chance to elect the vice-chairman from Russia and I think you would have two different figures put forward for that: one of them would be Mr Kovalev and the other person would be maybe Mr Dzasokhov, who was presented by Mr Zhirinovsky, who was one of the driving forces behind the political integration with Belorussia. So, a lot depends upon your decision because that reflects, has a reaction, on the people.

And finally, the answer to the question "what does Russia need?" Always when I am making a speech abroad, I am asked how the west can help? What can be done? My answer is that Russia needs honest, open, moral, political and intellectual support for Russian reforms. We do not need money, we have enough already, I am afraid to say more than even you. Because you have our money in the Swiss banks - 22 billion dollars leaked from the country last year - 22 billion abroad. We don't need money. We need open and honest, moral and political and intellectual support. You must never give us advice which you would not accept for yourselves. Do not treat us as a second-hand democracy. We want to have the criteria you have in your own countries: that would be the best thing for us. Never suggest we elect a President who you would not elect for yourselves - I am sorry but that is what you are doing. For example, when such a strange person as Mr Lebed appears on the scene and so on and so on Š I was in Germany for example when there was a big noise about Mr Lebed and I was questioned by many people - I have good relations with Mr Lebed, but I asked the people: "Are you ready to elect Mr Lebed as your chancellor?" They said no ! So I said why are you asking us to elect him as our President? Never give us advice which you would not accept for yourselves because we have a different history, but we are one civilisation. The next century should be the century of civilisations and not of single countries. Thank you very much.

June 22, 1997

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