Bush was less eager. His predecessor, Ronald Reagan, had blown a huge hole in the budget by cutting taxes and increasing defense spending; then he had somewhat rashly decided to go along with Gorbachev’s project to rearrange the world system. Bush’s national-security team, which included the realist defense intellectual Brent Scowcroft, had taken a pause to review the nation’s Soviet policy. The big debate within the U.S. government was whether Gorbachev was in earnest; once it was concluded that he was, the debate was about whether he’d survive.
As the historian Vladislav Zubok explains in his recent book “Collapse: The Fall of the Soviet Union” (Yale), “This was a fundamental statement, a foundation for all future negotiations.” But, as two members of Gorbachev’s team who were present for the conversations noted, Bush did not react. Perhaps it was because he was recovering from seasickness. Perhaps it was because he was not one for grand statements and elevated rhetoric. Or perhaps it was because to him, as a practical matter, the declaration of peace and partnership was meaningless. As he put it, a couple of months later, to the German Chancellor, Helmut Kohl, “We prevailed and they didn’t.” Gorbachev thought he was discussing the creation of a new world, in which the Soviet Union and the United States worked together, two old foes reconciled. Bush thought he was merely negotiating the terms for the Soviets’ surrender. (...)
In February, 1990, two months after the summit with Bush on the Maxim Gorky, Gorbachev hosted James Baker, the U.S. Secretary of State, in Moscow. This was one of Gorbachev’s last opportunities to get something from the West before Germany reunified. But, as Mary Elise Sarotte relates in “Not One Inch: America, Russia, and the Making of Post-Cold War Stalemate” (Yale), her recent book on the complex history of NATO expansion, he was not up to the task. Baker posed to Gorbachev a hypothetical question. “Would you prefer to see a unified Germany outside of NATO, independent and with no U.S. forces,” Baker asked, “or would you prefer a unified Germany to be tied to NATO, with assurances that NATO’s jurisdiction would not shift one inch eastward from its present position?” This last part would launch decades of debate. Did it constitute a promise—later, obviously, broken? Or was it just idle talk? In the event, Gorbachev answered lamely that of course NATO could not expand. Baker’s offer, if that’s what it was, would not be repeated. In fact, as soon as people in the White House got wind of the conversation, they had a fit. Two weeks later, at Camp David, Bush told Kohl what he thought of Soviet demands around German reunification. “The Soviets are not in a position to dictate Germany’s relationship with NATO,” he said. “To hell with that.”
The U.S. pressed its advantage; Gorbachev, overwhelmed by mounting problems at home, settled for a substantial financial inducement from Kohl and some vague security assurances. Soon, the Soviet Union was no more, and the overriding priority for U.S. policymakers became nuclear deproliferation. Ukraine, newly independent, had suddenly become the world’s No. 3 nuclear power, and Western countries set about persuading it to give up its arsenal. Meanwhile, events in the former Eastern Bloc were moving rapidly. (...)
After the Soviet collapse, Western advisers, investment bankers, democracy promoters, and just plain con men flooded the region. The advice on offer was, in retrospect, contradictory. On the one hand, Western officials urged the former Communist states to build democracy; on the other, they made many kinds of aid contingent on the implementation of free-market reforms, known at the time as “shock therapy.” But the reason the reforms had to be administered brutally and all at once—why they had to be a shock—was that they were by their nature unpopular. They involved putting people out of work, devaluing their savings, and selling key industries to foreigners. The political systems that emerged in Eastern Europe bore the scars of this initial contradiction.
In almost every former Communist state, the story of reform played out in the same way: collapse, shock therapy, the emergence of criminal entrepreneurs, violence, widespread social disruption, and then, sometimes, a kind of rebuilding. Many of the countries are now doing comparatively well. Poland has a per-capita G.D.P. approaching Portugal’s; the Czech Republic exports its Škoda sedans all over the world; tiny Estonia is a world leader in e-governance. But the gains were distributed unequally, and serious political damage was done.
In no country did the reforms play out more dramatically, and more consequentially, than in Russia. Boris Yeltsin’s first post-Soviet Cabinet was led by a young radical economist named Yegor Gaidar. In a matter of months, he transformed the enormous Russian economy, liberalizing prices, ending tariffs on foreign goods, and launching a voucher program aimed at distributing the ownership of state enterprises among the citizenry. The result was the pauperization of much of the population and the privatization of the country’s industrial base by a small group of well-connected men, soon to be known as the oligarchs. When the parliament, still called the Supreme Soviet and structured according to the old Soviet constitution, tried to put a brake on the reforms, Yeltsin ordered it disbanded. When it refused to go, Yeltsin ordered that it be shelled. Many of the features that we associate with Putinism—immense inequality, a lack of legal protections for ordinary citizens, and super-Presidential powers—were put in place in the early nineteen-nineties, in the era of “reform.”
When it came to those reforms, did we give the Russians bad advice, or was it good advice that they implemented badly? And, if it was bad advice, did we dole it out maliciously, to destroy their country, or because we didn’t know what we were doing? Many Russians still believe that Western advice was calculated to harm them, but history points at least partly in the other direction: hollowing out the government, privatizing public services, and letting the free market run rampant were policies that we also implemented in our own country. The German historian Philipp Ther argues that the post-Soviet reform process would have looked very different if it had taken place even a decade earlier, before the so-called Washington Consensus about the benevolent power of markets had congealed in the minds of the world’s leading economists. One could add that it would also have been different two decades later, after the 2008 financial crisis had caused people to question again the idea that capitalism could be trusted to run itself.
Back during the last months of Gorbachev’s tenure, there was briefly talk of another Marshall Plan for the defeated superpower. A joint Soviet-American group led by the economist Grigory Yavlinsky and the Harvard political scientist Graham Allison proposed something they called a Grand Bargain, which would involve a huge amount of aid to the U.S.S.R., contingent on various reforms and nonproliferation efforts. In “Collapse,” Zubok describes a National Security Council meeting in June, 1991, at which the Grand Bargain was discussed. Nicholas Brady, then the Secretary of the Treasury, spoke out forcefully against extensive aid to the Soviet Union. He was candid about America’s priorities, saying, “What is involved is changing Soviet society so that it can’t afford a defense system. If the Soviets go to a market system, then they can’t afford a large defense establishment. A real reform program would turn them into a third-rate power, which is what we want.”
But, if our advice and actions did damage to Russia, they also did damage to us. In a forthcoming book, “How the West Lost the Peace” (Polity), translated by Jessica Spengler, Ther writes on the concept of “co-transformation.” Change and reform moved in both directions. Borders softened. We sent Russia Snickers bars and personal computers; they sent us hockey players and Tetris. But there were less positive outcomes, too. It was one thing to impose “structural adjustment” on the states of the former Eastern Bloc, quite another when their desperate unemployed showed up at our borders. Ther uses the example of Poland—a large country that underwent a jarring and painful reform period yet emerged successfully, at least from an economic perspective, on the other side. But in the process many people were put out of work; rural and formerly industrialized sections of the country did not keep up with the big cities. This generated a political reaction that was eventually expressed in support for the right-wing nationalist Law and Justice Party, which in 2020 all but banned abortions in Poland. At the same time, a great many Poles emigrated to the West, including to the United Kingdom, where their presence engendered a xenophobic reaction that was one of the proximate causes, in 2016, of Brexit.
The reforms did not merely cause financial pain. They led to a loss in social status, to a loss of hope. These experiences were not well captured by economic statistics. The worst years for Russians were the ones between 1988 and 1998; after that, the ruble was devalued, exports began to rise, oil prices went up, and, despite enormous theft at the top, the dividends trickled down to the rest of society. But the aftereffects of that decade of pain were considerable. Life expectancy had dropped by five years; there was severe social dislocation. At the end of it, many people were prepared to support, and some people even to love, a colorless but energetic former K.G.B. agent named Vladimir Putin.
In almost every former Communist state, the story of reform played out in the same way: collapse, shock therapy, the emergence of criminal entrepreneurs, violence, widespread social disruption, and then, sometimes, a kind of rebuilding. Many of the countries are now doing comparatively well. Poland has a per-capita G.D.P. approaching Portugal’s; the Czech Republic exports its Škoda sedans all over the world; tiny Estonia is a world leader in e-governance. But the gains were distributed unequally, and serious political damage was done.
In no country did the reforms play out more dramatically, and more consequentially, than in Russia. Boris Yeltsin’s first post-Soviet Cabinet was led by a young radical economist named Yegor Gaidar. In a matter of months, he transformed the enormous Russian economy, liberalizing prices, ending tariffs on foreign goods, and launching a voucher program aimed at distributing the ownership of state enterprises among the citizenry. The result was the pauperization of much of the population and the privatization of the country’s industrial base by a small group of well-connected men, soon to be known as the oligarchs. When the parliament, still called the Supreme Soviet and structured according to the old Soviet constitution, tried to put a brake on the reforms, Yeltsin ordered it disbanded. When it refused to go, Yeltsin ordered that it be shelled. Many of the features that we associate with Putinism—immense inequality, a lack of legal protections for ordinary citizens, and super-Presidential powers—were put in place in the early nineteen-nineties, in the era of “reform.”
When it came to those reforms, did we give the Russians bad advice, or was it good advice that they implemented badly? And, if it was bad advice, did we dole it out maliciously, to destroy their country, or because we didn’t know what we were doing? Many Russians still believe that Western advice was calculated to harm them, but history points at least partly in the other direction: hollowing out the government, privatizing public services, and letting the free market run rampant were policies that we also implemented in our own country. The German historian Philipp Ther argues that the post-Soviet reform process would have looked very different if it had taken place even a decade earlier, before the so-called Washington Consensus about the benevolent power of markets had congealed in the minds of the world’s leading economists. One could add that it would also have been different two decades later, after the 2008 financial crisis had caused people to question again the idea that capitalism could be trusted to run itself.
Back during the last months of Gorbachev’s tenure, there was briefly talk of another Marshall Plan for the defeated superpower. A joint Soviet-American group led by the economist Grigory Yavlinsky and the Harvard political scientist Graham Allison proposed something they called a Grand Bargain, which would involve a huge amount of aid to the U.S.S.R., contingent on various reforms and nonproliferation efforts. In “Collapse,” Zubok describes a National Security Council meeting in June, 1991, at which the Grand Bargain was discussed. Nicholas Brady, then the Secretary of the Treasury, spoke out forcefully against extensive aid to the Soviet Union. He was candid about America’s priorities, saying, “What is involved is changing Soviet society so that it can’t afford a defense system. If the Soviets go to a market system, then they can’t afford a large defense establishment. A real reform program would turn them into a third-rate power, which is what we want.”
But, if our advice and actions did damage to Russia, they also did damage to us. In a forthcoming book, “How the West Lost the Peace” (Polity), translated by Jessica Spengler, Ther writes on the concept of “co-transformation.” Change and reform moved in both directions. Borders softened. We sent Russia Snickers bars and personal computers; they sent us hockey players and Tetris. But there were less positive outcomes, too. It was one thing to impose “structural adjustment” on the states of the former Eastern Bloc, quite another when their desperate unemployed showed up at our borders. Ther uses the example of Poland—a large country that underwent a jarring and painful reform period yet emerged successfully, at least from an economic perspective, on the other side. But in the process many people were put out of work; rural and formerly industrialized sections of the country did not keep up with the big cities. This generated a political reaction that was eventually expressed in support for the right-wing nationalist Law and Justice Party, which in 2020 all but banned abortions in Poland. At the same time, a great many Poles emigrated to the West, including to the United Kingdom, where their presence engendered a xenophobic reaction that was one of the proximate causes, in 2016, of Brexit.
The reforms did not merely cause financial pain. They led to a loss in social status, to a loss of hope. These experiences were not well captured by economic statistics. The worst years for Russians were the ones between 1988 and 1998; after that, the ruble was devalued, exports began to rise, oil prices went up, and, despite enormous theft at the top, the dividends trickled down to the rest of society. But the aftereffects of that decade of pain were considerable. Life expectancy had dropped by five years; there was severe social dislocation. At the end of it, many people were prepared to support, and some people even to love, a colorless but energetic former K.G.B. agent named Vladimir Putin.
by Keith Gessen, New Yorker | Read more:
Image: Eduardo Morciano; Source photograph from Getty
