Post by RedFlag32 on Jul 23, 2007 16:53:31 GMT
from the July 23, 2007 edition -
www.csmonitor.com/2007/0723/p15s01-wmgn.html
New insights on the Soviet Union's collapse
a former Russian official blames the threat of famine,
not Gorbachev's reform policies.
By David R. Francis | Columnist
Crude oil prices last week were flirting with a record high. It's
great news - for the Russians.
Low oil prices contributed to the fall of the Soviet Union in 1991.
In Russia today, high oil and natural gas prices are, to a large
degree, the reason for an economic boom.
In the first quarter of this year, Russia's economy steamed along at
a level 7.9 percent above the same three months of 2006. Last year,
Russia's gross domestic product was up 7.8 percent, notes Charles
Movit, an economist at PlanEcon, part of Global Insight, a consulting
firm in Waltham, Mass.
Russia's growth rate is not quite up to that of China. But, as Mr.
Movit puts it, the rate is "pretty enviable from a Western
standpoint."
With its massive exports of gas and oil (at least $200 billion a
year), Russia has considerable economic clout in Western Europe. It
supplies 40 percent of Germany's natural gas, for instance.
"Russia is very strong," says Marshall Goldman, an economist at
Wellesley College in Massachusetts. It may even be "stronger than in
its history" - a view not widely shared by other Russia experts.
In November, the Brookings Institution will publish the English
translation of "Collapse of an Empire: Lessons for Modern Russia,"
now a bestseller in Russia. Written by Yegor Gaidar, an economist who
was Russia's acting prime minister between 1991 and 1994, the book
uses information from Soviet archives to tell the story of the last
few years of the Soviet Union. It tries to shoot down the "myth" held
by most Russians that the Soviet Union was "a dynamically developing
world superpower until usurpers initiated disastrous reforms." It
also warns that Russia should avoid the peril of another collapse in
oil prices.
What happened, states Mr. Gaidar, is that Soviet grain production
stagnated between 1966 and 1990. Meanwhile, 80 million people moved
from farms to cities. New Soviet output of oil and gas was not
sufficiently expanded to provide the hard currency needed to buy
grain abroad. Eventually, the Soviets had to borrow foreign money to
buy grain.
Mikhail Gorbachev, the last leader of the Soviet Union, told a
meeting of the Communist Party, "We are buying [the grain] because we
cannot survive without it," noted Gaidar in a talk to the American
Enterprise Institute (AEI) in Washington last fall. An associate of
Mr. Gorbachev had warned in March 1991 of the risk of famine in June
if foreign grain wasn't obtained.
The result was that Moscow could not suppress revolt in its empire -
as it had done in earlier years in East Germany, Hungary, and
Czechoslovakia - without losing Western loans.
Gaidar argues that if the Soviet military had crushed Solidarity
Party demonstrations in Warsaw, "the Soviet Union would not have
received the desperately needed $100 billion from the West."
Similarly, when the Soviets tried to use force to reestablish control
in the Baltic states in January 1991, the reaction from the West,
including the United States, was: "You can choose any solution, but
please forget about the $100 billion credit." The Soviets backed
down.
Oversimplifying history, Gorbachev was perceived as weak for allowing
the dissolution of the Russian empire, overthrown in a military coup,
and eventually replaced by Boris Yeltsin.
Gaidar's thesis isn't accepted in its entirety by other experts. Leon
Aron, a fellow at the AEI and a friend of Gaidar, says glasnost -
Gorbachev's effort to bring openness and transparency into the
activities of Soviet institutions, with greater freedom of
information - opened the USSR to new political, ideological, and
spiritual ideas. "The economic side made collapse faster," he says.
Goldman figures that Gorbachev's dismantling of the Soviet
military-industrial complex was the main cause of the collapse. The
aluminum industry, for example, supplied raw material for military
aircraft, the steel industry for the 60,000 tanks facing the West.
Afterwards, "there was no longer anything there," he says. At its
peak, the military absorbed 30 percent of total Soviet output. Today,
Russia spends about 5 percent on its military.
Of course, not all is shiny in Russia today. The nation is not yet
investing enough, says Stephen Cohen, a Russia expert at Princeton
University in New Jersey. Too much investment money held by the elite
is fleeing abroad.
The World Bank says only 14 percent of Russians were living below the
poverty level last year, compared with 30 percent in 1999. But Mr.
Cohen says "an awful lot of people" are hit by a crumbling
infrastructure, the privatization of government property after the
Soviet Union's collapse, and poor pensions, healthcare, and
education. Per capita income is a mere $10,600 a year, Movit reckons
(versus $22,000 in the US).
But Russia today has a budget surplus, a $112 billion "Stabilization
Fund" to counter a big drop in oil and gas prices, and some $400
billion in its international reserves.
Unlike Rodney Dangerfield, Russia gets some respect nowadays.
www.csmonitor.com/2007/0723/p15s01-wmgn.html
New insights on the Soviet Union's collapse
a former Russian official blames the threat of famine,
not Gorbachev's reform policies.
By David R. Francis | Columnist
Crude oil prices last week were flirting with a record high. It's
great news - for the Russians.
Low oil prices contributed to the fall of the Soviet Union in 1991.
In Russia today, high oil and natural gas prices are, to a large
degree, the reason for an economic boom.
In the first quarter of this year, Russia's economy steamed along at
a level 7.9 percent above the same three months of 2006. Last year,
Russia's gross domestic product was up 7.8 percent, notes Charles
Movit, an economist at PlanEcon, part of Global Insight, a consulting
firm in Waltham, Mass.
Russia's growth rate is not quite up to that of China. But, as Mr.
Movit puts it, the rate is "pretty enviable from a Western
standpoint."
With its massive exports of gas and oil (at least $200 billion a
year), Russia has considerable economic clout in Western Europe. It
supplies 40 percent of Germany's natural gas, for instance.
"Russia is very strong," says Marshall Goldman, an economist at
Wellesley College in Massachusetts. It may even be "stronger than in
its history" - a view not widely shared by other Russia experts.
In November, the Brookings Institution will publish the English
translation of "Collapse of an Empire: Lessons for Modern Russia,"
now a bestseller in Russia. Written by Yegor Gaidar, an economist who
was Russia's acting prime minister between 1991 and 1994, the book
uses information from Soviet archives to tell the story of the last
few years of the Soviet Union. It tries to shoot down the "myth" held
by most Russians that the Soviet Union was "a dynamically developing
world superpower until usurpers initiated disastrous reforms." It
also warns that Russia should avoid the peril of another collapse in
oil prices.
What happened, states Mr. Gaidar, is that Soviet grain production
stagnated between 1966 and 1990. Meanwhile, 80 million people moved
from farms to cities. New Soviet output of oil and gas was not
sufficiently expanded to provide the hard currency needed to buy
grain abroad. Eventually, the Soviets had to borrow foreign money to
buy grain.
Mikhail Gorbachev, the last leader of the Soviet Union, told a
meeting of the Communist Party, "We are buying [the grain] because we
cannot survive without it," noted Gaidar in a talk to the American
Enterprise Institute (AEI) in Washington last fall. An associate of
Mr. Gorbachev had warned in March 1991 of the risk of famine in June
if foreign grain wasn't obtained.
The result was that Moscow could not suppress revolt in its empire -
as it had done in earlier years in East Germany, Hungary, and
Czechoslovakia - without losing Western loans.
Gaidar argues that if the Soviet military had crushed Solidarity
Party demonstrations in Warsaw, "the Soviet Union would not have
received the desperately needed $100 billion from the West."
Similarly, when the Soviets tried to use force to reestablish control
in the Baltic states in January 1991, the reaction from the West,
including the United States, was: "You can choose any solution, but
please forget about the $100 billion credit." The Soviets backed
down.
Oversimplifying history, Gorbachev was perceived as weak for allowing
the dissolution of the Russian empire, overthrown in a military coup,
and eventually replaced by Boris Yeltsin.
Gaidar's thesis isn't accepted in its entirety by other experts. Leon
Aron, a fellow at the AEI and a friend of Gaidar, says glasnost -
Gorbachev's effort to bring openness and transparency into the
activities of Soviet institutions, with greater freedom of
information - opened the USSR to new political, ideological, and
spiritual ideas. "The economic side made collapse faster," he says.
Goldman figures that Gorbachev's dismantling of the Soviet
military-industrial complex was the main cause of the collapse. The
aluminum industry, for example, supplied raw material for military
aircraft, the steel industry for the 60,000 tanks facing the West.
Afterwards, "there was no longer anything there," he says. At its
peak, the military absorbed 30 percent of total Soviet output. Today,
Russia spends about 5 percent on its military.
Of course, not all is shiny in Russia today. The nation is not yet
investing enough, says Stephen Cohen, a Russia expert at Princeton
University in New Jersey. Too much investment money held by the elite
is fleeing abroad.
The World Bank says only 14 percent of Russians were living below the
poverty level last year, compared with 30 percent in 1999. But Mr.
Cohen says "an awful lot of people" are hit by a crumbling
infrastructure, the privatization of government property after the
Soviet Union's collapse, and poor pensions, healthcare, and
education. Per capita income is a mere $10,600 a year, Movit reckons
(versus $22,000 in the US).
But Russia today has a budget surplus, a $112 billion "Stabilization
Fund" to counter a big drop in oil and gas prices, and some $400
billion in its international reserves.
Unlike Rodney Dangerfield, Russia gets some respect nowadays.