Simon Pirani's intricate story of Russia's economic devastation in the 1990's and how it surged ahead under Vladimir Putin begins with two chapters that set the stage. "The speed at which the Soviet Union collapsed, the extent of the economic and political rot that set in over decades beforehand, the force with which the winds of international capital blew over the mechanisms devised to obstruct them, and the ease with which sections of the elite abandoned Soviet ideology..." was never presented as clearly in financial terms as it is here. Pirani covered the Kuzbass coalfield protests in 1990 and protests in Izhevsk, Togliatti and Samara a decade later. As in most countries, miners were in the vanguard of worker protest organizing, but for back pay rather than working conditions. Soviet trade unions were docile collaborators with the bosses, so the emergence of labor organizations that actually represented the workers came much later than elsewhere. The independent Mineworkers' Union, which emerged after the 1991 national strike was the first non-Soviet labor structure.
Fluent in Russian and acquainted with the western advisers to Yeltsin's Kremlin, Pirani provides a narrative of the financial dealings that brought Russia to its knees by 1998. Credit Suisse First Boston's Boris Johnson and Steven Jennings worked "to launch the privatization program before Parliament met, thus pre-empting such democratic process as there was. ... He and Jennings would go on to head Russia's largest investment bank, Renaissance Capital. ... In 1993 the appointment as international undersecretary at the U.S. Treasury of Lawrence Summers, also from Harvard, gave the group a powerful ally. An extraordinary procedure developed. The U.S. advisers worked out policy measures with Gaidar, Chubais and their colleagues, which were written straight into presidential decrees. Every single significant economic decision of Yeltsin's presidency was implemented this way. Parliament was bypassed."
Putin stepped into the Acting Presidency at the close of the 1990's when Russia was a collapsed state with an empty treasury and massive debt to the IMF, World Bank and foreign governments. The IMF ignored its criteria and shoveled ever-larger loans to the Kremlin, desperately seeking to prop up Yeltsin. His profligate money-printing yielded 2500% inflation wiping out the savings of ordinary people and bankrupting the Mariinsky (Kirov) Opera and Ballet company. Universal secondary education was abandoned. Endemic factory closures had driven a third of the population below the poverty line. Life expectancy had plummeted and mortality rates had soared.
Pirani writes "Putin's accession to the presidency in 2000 meant the beginning of the end for the Communist Party of the Russian Federation, then post-Soviet Russia's most powerful political party." Within five years Putin had repaid the debt and the State had $478 billion in foreign currency and gold reserves. Since 2002 Russia has had a budget surplus of at least 4% every year according to the International Monetary Fund. Putin established a Stabilization fund, one of the largest sovereign wealth funds in the world making foreign investments. His popularity was cemented by the rising living standards and improving life expectancy in contrast to the plummeting rates of both in the 1990's. Pirani rejects the "KGB takeover" storyline so popular in the west and shows us Putin as the technocrat who made the state function with liberal market reformers including Kudrin and Chubais. "The state disciplined the oligarchs in the interests of the property-owning class as a whole, and restored to itself the functions it lost in the chaos of the 1990's."
Somehow, Boris Berezovsky makes an appearance in all books dealing with Russia in the last quarter of the twentieth century. Pirani lays a number of crimes at his feet: "Berezovsky, whose various foundations make little impact on social movements in Russia, has had one success: in shaping English-language press coverage. Having, in 1996, mobilized power and money to determine the outcome of the presidential election, and when in office reveled in the opaque nexus linking politics and business, he is presented as a democrat. Having done more than anyone to smooth Putin's path to the Kremlin, and sown seeds of the second Chechen war in his confidential dealings with Chechen military formations, he is presented as a principled opponent of Putin's." Pirani points out that Berezovsky was far more powerful and influential within the Yeltsin Presidency than Putin, which helps explain the dramatic differences between the Yeltsin and Putin presidencies. Aided by the oil price boom, Putin had reversed Russia's collapse before he handed the Presidency over to Medvedev.
Medvedev didn't have Putin's luck. His sunny charm could not offset cratering oil prices and the global financial crisis. One of Medvedev's early modernization efforts was the protection of intellectual property, a high priority of Western companies. The anti-piracy investigations have had ambiguous results. At the regional level police may focus on opposition newspapers, human rights defenders, immigrant advocacy, and environmental organizations rather than any other users of unlicensed software. Often the charge is dropped but the computers aren't returned for months and the organizations are unable to function while the case is under consideration and their databases are gone. Some of the organizations produced packaging and receipts to prove legitimate purchase of the Microsoft software. Nevertheless, in court Microsoft lawyers claimed the computers contained pirated software. They even portrayed their company as victimized by these impoverished groups until embarrassed by publicity of their actions on Russian TV and then in U.S. newspapers. As with other reforms, the local authorities make use of Presidential initiatives to serve their own ends, prioritizing anti-piracy raids against those they find most irksome.
Western observers have been slow to take Medvedev seriously, especially those who denied Putin would relinquish the Presidency. This book provides the context and challenges Medvedev faces, but to understand the man, it's still necessary to read his speeches, watch his press conferences and interviews--even follow him on twitter or his blog. In temperament he lacks the crudity, swagger and braggadocio of his predecessors. He speaks and writes at length about the need for judicial equity, economic diversification, citizen input, environmental protection, and the elimination of corruption. But can he do it? Since he only arrived in Moscow in 1999, a few months before Putin became President, he lacks Putin's bureaucratic experience. Yet he is far more than a polite global face on Putin's Russia. He has had a number of foreign diplomacy successes, including the recent settlement of the disputed arctic border with Norway, commitments by leading south Korean and Silicon Valley companies to invest in Skolkovo high tech research, and overcoming U.S. opposition to accomplish the September 2 destruction of four Afghan drug labs on the Afghan Pakistan border by two Russian counter-narcotics agents with Afghans trained in Domodedovo and U.S. agents.
Putin's reputation for crude slang in referring to enemies such as terrorists is sometimes poorly understood in the West. Pirani clarifies the meaning of the famous quote, "You will forgive me, but if we catch them in the toilet, we will wet them even in the outhouse." The Russian audience heard it as a reference to Gulag prisoners' dealings with informers against dissidents. A very different Putin quote is famous in Russia but almost unknown in the West. Paying tribute to Valery Gergiev, the Ossetian conductor who saved the Mariinsky Opera and Ballet, Putin said, "I will serve my term and disappear, but Gergiev will last forever."
His major moves frequently catch everyone by surprise but who can imagine Putin disappearing?