Russian Roulette

Russia 2010
by Daniel Yergin and Thane Gustafson
Nicholas Brealey Publishing
Distributed in Australia by Allen & Unwin

The defeat of communism and the collapse of the Soviet Union seemed to herald a new era of stability and democracy, not least for the Russians themselves.  Unfortunately, history seldom unfolds so neatly.  Russia is instead crashing headlong through a protracted economic and political experiment, and few will risk a view as to where it will end.

Russia 2010 is, however, ready to make some considered predictions.  Yergin and Gustafson, a pair of American think-tankers who specialise in energy and geopolitics, believe that the country cannot return to communism:  the ideological infrastructure has simply withered away.  They take the view that by 2010 Russia will have stabilised into some sort of market system.  But the road to get there, and the details of the destination, vary widely in the five scenarios the book puts forward.

The first possibility, "Muddling Down", is essentially an extension of the present.  The central government of Russia is presently characterised by deadlock, with a rough three-way balance between pro-market reformers, conservative bureaucrats scrabbling for resources, and authoritarian nationalists.  Cutting across this pattern is another cleavage, with the provincial governments having enough power to frustrate Moscow but not enough to break away

Untidy as it is, there are considerable advantages in this system.  Provided the moderates can hold out against the extremists in elections, the process of restructuring the economy will continue, albeit slowly and with periodic setbacks.  The key threat is mass unemployment, which could feed fringe movements and paralyse the government entirely.  But unemployment can probably be contained through subsidies and promises, and the military -- which must also remain employed -- kept busy with action in one or another recalcitrant province.

In this scenario a weak central government can handle one crisis at a time but if faced with multiple crises it might go under.  By 2010, the outlines of a functioning economy and a stable political system will have started to emerge, but a solution will still be a long way off.  "Muddling Down" is the slow, confusing way of reaching capitalism.

ELITES

The second scenario, "Two-Headed Eagle", sees the emergence of powerful elites within the democratic system.  The key is public disgust with crime and corruption, such that a coalition of industrial technocrats, can-do state bureaucrats, and non-communist military heavyweights is elected on a platform of cleaning up the mess with whatever means are necessary.  Yergin and Gustafson see this as "the premature reconstitution of a strong state" -- premature because the institutions of the market economy are not sufficiently developed to defend their interests.

The leaders in this model see government largely as a process of dividing resources amongst the lobbies who can influence decision-making.  While it provides stability after decades of convulsion, "Two-Headed Eagle" is a system not for solving problems but for suppressing them, although within a quasi-market framework.  Eventually, there is likely to be an explosion expressed through union militancy and ultra-nationalistic splinter parties in the provinces.

"The Long Good-Byes" scenario involves the slow unravelling of the Russian Federation, as regional leaders slowly gain the upper hand over Moscow.  St Petersburg becomes the de facto, and eventually the formal, capital of a northern confederation of cities based on trade with Europe.  The resource-rich eastern maritime provinces turn increasingly to Japan and the Pacific Rim, with Vladivostok becoming a thriving regional centre.  In the south, the Central Asian provinces form another group based on agricultural exports.  Paradoxically, the move to a number of smaller states may help the reformers in Moscow as it would remove the source of many of the deadlocks in the current system.

MILITARY RULE

A less benign model is "Russian Bear".  This scenario grows out of chaos in Moscow, as hungry mobs start to loot food stores while unpaid police stand by.  The divided government effectively collapses.  The only remaining organised force, the elite military units, move in against the mob and establish a dictatorship, declaring that democracy has failed.  At the same time, the new government makes clear that dissent from the provinces will not be tolerated and replaces several provincial leaders with hand-picked military men.

The emphasis of the new government is that of political control:  economically, it follows -- indeed, enforces --- free-market policies.  The "Russian Bear" looks not unlike Pinochet's Chile.  The scenario is, however, dependent on the rise of a quasi-military leader who combines charisma with administrative competence.  In the long term, it runs into problems similar to those of the "Two-Headed Eagle" model.  Eventually, capitalism will be reached but the road is studded with sudden, sharp convulsions.

The final scenario, "Chudo" (miracle), assumes that the reformers will continue to slowly make ground until about 2002, to the point where a reliable legal system has been established, an army of viable small firms has developed, and a fair-sized pool of capital has grown.  But the process of incremental reform can go no further, blocked by the large industrial enterprises.  An election is fought on the issue of dismantling and privatising the Thousand Dinosaurs, and the reformers win.  This proves to be the trigger for a spurt of economic growth fuelled by foreign investment, although the cost of the final step of restructuring is widespread unemployment.

Yergin and Gustafson carefully avoid ranking their scenarios in order of likelihood, but one reads the section about the "Chudo" scenario with a certain scepticism.  It all seems a bit too easy, given Russia's current parlous state.  But perhaps the rise of Japan and Germany would have seemed equally implausible in, say, 1946.

It is not difficult to find fault with any or all of the scenarios in Russia 2010.  It might be said, also that Yergin and Gustafson ignore several important problems, such as the rise of organised crime, the awful state of the country's natural environment, and the impact of international events.  But such criticisms miss the point of the book, which is to provide a banquet of food for thought, not just about Russia but about the process by which history is made.