Avoid the oligarchisation of post-Soviet Rusia

The real problem is that Russia had oligarchized under Stalin and that oligarchy had been given tacit approval by Brezhnev.

Then Gorbachev, Yeltsin and the US Congress all worked together to make sure that the oligarchy didn't die with Communism (not intentionally, but each made mistakes that helped the oligarchs).

fasquardon
 
The communists would be thrown out of power in the 1999-2000 elections with the blame for 1998 default.

Some very large assumptions there:
Economic policy under the Communists would have been very different, it's more likely that the government would have tried to reassert state control, fix prices and continue running large deficits leading to hyperinflation and shortages. The 1998 crisis was an FX one, and hurt more because the economy was actually de-dollarizing.
2000 elections under a Communist government would have looked very different, how many parties would have been allowed to stand?
 
Poland went through a "shock therapy" in the early 90s. Very rough for a while, but a few years later, Poland's one of the better off former Eastern Block countries - with only the Czech Rep, Slovenia, and possibly Estonia being in better shape.

Still, Poland and Russia have different cultures, and Poland's proved more receptive to European-style mixed-market Capitalism than Russia.

I don't think the Marshall Plan's an adequate parallel to the immediate post-Communist situation. The end of WW2 wiped away the local power structures in Germany and the former occupied countries alike. Even the Netherlands had starvation just after the war. In the 90s, Communism may have collapsed, but the physical infrastructure remained. Some of the former Communist officials even remained in power, even as they quit the party. Especially in the former USSR, a lot of the former communist officials simply cannibalized the state owned enterprises, getting wealth and power in the process. Also, unlike post-war Germany, a lot of post-Communist Russians still have fond memories of the USSR (personal economic security, even if less personal freedom).

So while I could see a luckier Russia being something like a giant Poland, I really can't see it being even a giant Spain, let alone like a major EU member.
 
Poland went through a "shock therapy" in the early 90s. Very rough for a while, but a few years later, Poland's one of the better off former Eastern Block countries - with only the Czech Rep, Slovenia, and possibly Estonia being in better shape.

Poland recieved massive inflows of foreign money to fuel that "shock therapy", and proportionally Slovenia, Czechia and Estonia also received enormous foreign inflows. In the case of Russia, all the experts were saying that the same heavy financial inflows would be required, but no one who could mobilize such large amounts of money (Russia being a much larger economy than Poland) was willing to stump up the loans. So no surprise, Russia's "shock therapy" resulted in a crisis which left liberalism completely discredited.

There's really two ways for Russia to do better with a PoD after 1987:

1) Shock therapy is paired with massive US loans to jump start a new capitalist Russia.
2) Russia rejects shock therapy and goes for a slower pace of reform that even by the end of the 90s has significant portions of the economy owned and operated by the government.

The next best chance is for Andropov to live longer and for his anti-corruption campaign to clear out the worst of the oligarchism (which then might lead to liberalization as it is realized that to clear up all the corruption requires fundamental change to the system, or results in a stall, as Andropov chooses the system over destroying the favour market that lubricated the officially market-less economy).

(It's worth noting that things could have gone better in Poland and they could have gone worse in Poland, so Polish levels of foreign aid and investment in Russia could lead to better or worse results than it did in OTL's Poland, same as Poland itself could have seen better or worse outcomes in an ATL.)

fasquardon
 
A huge issue with keeping a Soviet style economy in place is that there was a huge demand for cheap credit by these industry, and with low oil prices the state could simply not finance it.
Russia would simply not be a able to hold off inflation
 
Poland recieved massive inflows of foreign money to fuel that "shock therapy", and proportionally Slovenia, Czechia and Estonia also received enormous foreign inflows. In the case of Russia, all the experts were saying that the same heavy financial inflows would be required, but no one who could mobilize such large amounts of money (Russia being a much larger economy than Poland) was willing to stump up the loans. So no surprise, Russia's "shock therapy" resulted in a crisis which left liberalism completely discredited.
This post communist liberalism seem to me, that it was mostly ideological not pragmatic. Different societies, different situations equals different solutions in my mind.
There's really two ways for Russia to do better with a PoD after 1987:

1) Shock therapy is paired with massive US loans to jump start a new capitalist Russia.
2) Russia rejects shock therapy and goes for a slower pace of reform that even by the end of the 90s has significant portions of the economy owned and operated by the government.
Perhaps Russia should have gotten expertise from a Scandinavian country like Norway? Norway has had a economic history that might make Norway more sympathetic to slower privatisation and less privatisation in general. Northern Norway has long had close ties with Russia too.
The next best chance is for Andropov to live longer and for his anti-corruption campaign to clear out the worst of the oligarchism (which then might lead to liberalization as it is realized that to clear up all the corruption requires fundamental change to the system, or results in a stall, as Andropov chooses the system over destroying the favour market that lubricated the officially market-less economy).
I am not very familiar with Andropov, could you provide me with some sources on him?
(It's worth noting that things could have gone better in Poland and they could have gone worse in Poland, so Polish levels of foreign aid and investment in Russia could lead to better or worse results than it did in OTL's Poland, same as Poland itself could have seen better or worse outcomes in an ATL.)

fasquardon
I suspect Russia would not benefit the same way as Poland, as Russia is more corrupt. Still Russia has more resources that might positivly affect them compared to Poland. Today Russian wages are very similar to Poland's so Russia might surpass Poland if they had better administration.
Income comparison between Russia and Poland 1800-2018.JPG
 
The real problem is that Russia had oligarchized under Stalin and that oligarchy had been given tacit approval by Brezhnev.

Then Gorbachev, Yeltsin and the US Congress all worked together to make sure that the oligarchy didn't die with Communism (not intentionally, but each made mistakes that helped the oligarchs).

fasquardon
Ironically, Stalin's pre-war system of continuously purging department leaders and replacing them with their underlings was supposed to combat oligarchization, however the system proved disastrously bad during the stress test of actual warfare, since the department chiefs and military officers were more preoccupied with covering their asses and playing political chess with their assistants rather than, y'know, fight or help fight the Germans.
 
This post communist liberalism seem to me, that it was mostly ideological not pragmatic. Different societies, different situations equals different solutions in my mind.

Well, most of us in the Americas and Europe live in liberal societies, so liberalism is like water and we are like fish. But liberalism has always always been more ideological than pragmatic. But it is an ideology that is much more compatible with a powerful state, so thus far it has tended to win out over other ideologies.

Perhaps Russia should have gotten expertise from a Scandinavian country like Norway? Norway has had a economic history that might make Norway more sympathetic to slower privatisation and less privatisation in general. Northern Norway has long had close ties with Russia too.

Hm. I doubt Norway has enough similarities to be too useful. (And they may have already been helping - I know the Russians were getting alot of economic advice from the Finns both during and after the collapse of the Soviet Union.)

I am not very familiar with Andropov, could you provide me with some sources on him?

I think the best picture I've gotten of Andropov has been from reading about Polidburo politics. So it's little snippets scattered in a host of books whose main focus is elsewhere...

The problem I have with biographies I've read that focused on the man is that those often confuse the image he projected with the man himself...

I suspect Russia would not benefit the same way as Poland, as Russia is more corrupt. Still Russia has more resources that might positivly affect them compared to Poland. Today Russian wages are very similar to Poland's so Russia might surpass Poland if they had better administration.

Are you sure Russia was more corrupt? 'Cuz Communist Poland was pretty darn corrupt.

fasquardon
 
Hm. I doubt Norway has enough similarities to be too useful. (And they may have already been helping - I know the Russians were getting alot of economic advice from the Finns both during and after the collapse of the Soviet Union.)
Noway has a history of extreme liberalism and of heavy state intervention in the economy this might give Norwegians more insight and sympathy for Russia. What i meant by extreme liberalism is the liberal alcohol laws during the early 1800s, this caused a great uptick in alcoholism and issues related to alcohol in Norway. The Norwegian state has also been very involved in many economic sectors, coming to dominate some(transportation). Norway has also heavy state involvement in the oil and gass industry. In this i see some similarities between Russia and Norway.
Are you sure Russia was more corrupt? 'Cuz Communist Poland was pretty darn corrupt.
Atleast Russia is more corrupt now than Poland. But to be honest i am not very familiar with corruption in the communist era in Eastern-Europe.
 
Atleast Russia is more corrupt now than Poland. But to be honest i am not very familiar with corruption in the communist era in Eastern-Europe.

Certainly, the stories my Polish friends and my Russian friends who lived under Communism tell are much the same in terms of how extensive corruption was and how it operated.

And yes, Russia is now more corrupt. But again, Russia did not have the resources with which to build a new system the way Poland did.

fasquardon
 
Wasn't going to happen after 1991 or even if you avoided communism. Russia's comparable to say Peru/Belize/guatemala -- the less functional bits of latindom.
 
I think you can certainly change things- Putin could have in 2000 perhaps have reversed large elements of privatisation, when the oligarchs were on the run.

Definitely to change it from the outset you would need a wildly different approach to privatisation in the 1990's but was that feasible in the chaos, the free-for-all of a bankrupt post Soviet Russia?

The big chance to make changes, to get it done properly over say 10 years was 2000 though, when Putin came to power. Question is, was he truly and 100% committed to taking back wealth for the Russian population?
 
Some interesting evidence from the time, showed that it was possible too.

https://www.nytimes.com/2000/10/08/magazine/the-autumn-of-the-oligarchs.html

Old, old article- but as we can see here, Putin had all the potential to reverse most of those privatisations, order significant back payments, seize back wealth if he so chose...he sort of stopped.

I would suggest not a reversion to Communism but a re-nationalisation, or partial, strategic review and then in the coming years a proper privatisation, far removed from the chaos of the 1990s. Give the oligarchs a profit, hell even let them run the companies in the interim but have them as annual millionaires not billionaires.

Then when the time is right, re-privatise and do so correctly. Do it right, not in a mad hurry.

Another one...

Putin Reaches Out to Oligarchs
MAURA REYNOLDSTIMES STAFF WRITER


In an odd Kremlin meeting that was both a scolding and a pep talk, President Vladimir V. Putin tried to patch up relations with Russia's captains of industry Friday, exhorting them to support his economic program and stop using their media outlets to "politicize" legal actions against big business.

Arrayed around an enormous table in an ornate Kremlin hall, 21 business leaders listened impassively as Putin tried to put to rest concerns that he had launched a war against them. And he reminded them, sternly and somewhat cryptically, that they have both exacerbated the country's economic problems and influenced the recent realignment of power.

"You must remember that you built this government to a great degree yourselves through political and quasi-political structures you control," Putin said in remarks broadcast on television. Citing a Russian folk saying, he continued: "It's no use blaming the mirror [if you have an ugly face]. Let's talk specifically and openly about what can be done so relations can become completely civilized."

The president pledged not to reverse Russia's controversial privatizations of the 1990s, in which valuable state enterprises were sold at fire-sale prices to insiders--rigged auctions in which most of the so-called oligarchs at the table made their fortunes.

In return, Putin asked them to support his plans to streamline taxes and gain Russian admission to the World Trade Organization. And he got that support, as well as an unusual promise to uphold Russia's "state" interests.

"The most important task for business is to preserve and increase the national wealth, to ensure the improvement of living standards," the business leaders said in a statement released afterward. "In pursuing their own goals, business must not forget the tasks facing the country as a whole. Companies and banks who uphold the state's interests while conducting their affairs will enjoy guaranteed support and wide-ranging help from the president."

Since Putin was inaugurated in May, Russian law enforcement bodies have opened several investigations into oligarchs, fueling speculation that the new president was fulfilling a vague campaign promise to destroy them "as a class."

But the raids were primarily aimed at two men--Vladimir A. Gusinsky and Vladimir O. Potanin--known to be rivals of other oligarchs with close Kremlin ties: Boris A. Berezovsky and Roman A. Abramovich.

It has not been clear who was behind the raids and what their goal was. But in Russia, where the government exercises enormous direct and indirect influence over investigators and judges, few have doubted that the raids were ordered for political reasons.

The Kremlin meeting Friday shed little new light on the situation. But even if the discussion failed to answer all their questions, it was clear that the oligarchs were at least grateful for the president's attentions.

"It was said clearly that there would be no revision of the privatization results in this country. And both the president and the government are in effect the guarantors of this," said Viktor Vekselberg, director of the Siberian-Ural Aluminum Co. "It was also made clear that the recent tendency to use law enforcement bodies to solve situations connected somehow to competition between big businesses is inadmissible."

This week, investigators unceremoniously dropped the charges against Gusinsky, who runs a media conglomerate that has been especially critical of the Kremlin. He quickly left the country to join his family in Spain. Potanin said Friday that he has received assurances that investigation of his business affairs will be nonpolitical and strictly by the book.

Boris Y. Nemtsov, a pro-market politician who organized the meeting, couldn't say why three of the country's most famous oligarchs--Berezovsky, Abramovich and Gusinsky--weren't invited.

"They were on the list we provided to the Kremlin," Nemtsov said at a news conference. "But since the meeting took place in the Kremlin, it was the president and his administration who took the decision, and the meeting took place in the format you saw today."

Despite the oddities, Nemtsov proclaimed the meeting a huge success, saying it marks "the end of the oligarchy."

"The oligarchs are tired of being oligarchs," he said. "Everyone agrees that it's time to play by the same set of rules. This is the real beginning of a new epoch. Business doesn't want any special treatment. They want to be law-abiding. . . . What business wants is clear, straightforward rules."

By calling the moguls to the Kremlin, Putin continued a tradition begun by former President Boris N. Yeltsin. But Yeltsin tended to call in a smaller number, about a half-dozen top bankers or the heads of large energy suppliers, who were the big moneymakers at the time.

By contrast, Putin's list of 21 was a motley group of industrialists; there were only a few bankers.

"The number of large companies has grown, and they have become more diverse," said Yakov S. Pappe, senior analyst with the Institute for Economic Forecasting. "By inviting more than Yeltsin did, Putin has stressed that he will pay more attention to the new, rising sectors of the economy--computers, telecommunications, mobile communications, the mass media, etc."

Mikhail G. Delyagin, director of the Institute for Globalization Problems, noted that the conciliatory noises coming out of the Kremlin on Friday contrasted sharply with the implicit threat in the wave of tax raids.

"What Putin and his administration did was a primitive two-step move. First the authorities showed that they were sort of crazy and ready to rub out anyone," Delyagin said. "Then they backed off and said: 'Well, maybe we overdid it a bit, but at least you have seen what we are capable of. So why don't you guys start playing by our rules and pay as much in taxes as we tell you. Or else. . . .' "

*

Alexei V. Kuznetsov of The Times' Moscow Bureau contributed to this report.

Written in late July 2000, LA Times. Last paragraph is fairly telling but I still think he held a load of power at this stage, had them on the run. Clever but perhaps missed a trick if he actually wanted to claw back wealth, unpaid taxes for the state.

Would argue that brought most oligarchs time to leave the country, to get wealth offshore, to purchase foreign assets as a hedge...
 
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