Notes from Away: A Russian Winter
Wednesday, February 18, 2015 5:13 AM
MOSCOW. In the winter and spring of 1992, just weeks after the dissolution of the Soviet Union, in a street market in Moscow overlooking the Kremlin and Red Square, a young international lawyer, an American in Russia for the first time, could buy a babushka doll to take home as a keepsake.
Also called matryoshka, these "nesting dolls" were made of thin shells of painted wood. Traditionally, they showed generations of a peasant family, with smaller and smaller dolls nesting within the larger ones.
A popular variation when I was in Moscow that winter was to paint the matryoshka with the faces of Soviet leaders. Encasing them all was the figure of Boris Yeltsin, who had stood on a tank the previous summer to forestall a coup. Just inside his shell was Gorbachev, the architect of perestroika and glasnost, of "restructuring" and "openness," who to his eternal credit had refused to send Soviet armies to crush the surge to freedom of the peoples of Central Europe in November 1989. The Gorbachev doll contained other Soviet leaders in descending size as they receded in history. Brezhnev. Khrushchev. Stalin. Lenin. Sometimes Lenin contained the last Tsar.
When the Berlin Wall fell, my wife and I were working as lawyers in New York. We wanted somehow to play a small part in the momentous events in Central Europe. My law firm agreed to send us to Brussels, and then to Warsaw. There I soon found myself acting as legal advisor to the Polish government, as it planned to transfer share ownership of hundreds of state-owned companies directly to the Polish people.
The ideas behind the so-called "mass privatization" programs that Poland and other formerly communist countries adopted in the early 1990s were championed by some economists at Harvard and MIT, including the still famous Jeffrey Sachs, and funding for legal work for the programs was provided by the World Bank.
So when a courageous band of reform-minded economists in Moscow, empowered by the sudden rise of Yeltsin, were looking to apply some of the same privatization principles and techniques to some 25,000 state-owned companies in Russia, in the winter of 1992, the World Bank and the Cambridge economists offered to arrange "technical assistance." That meant dispatching to Moscow a small number of professionals who had worked on similar programs in other countries.
It was a time of paranoia and some personal danger. One minister's family was in a suspicious car accident; another in later years would survive poisoning; and bullet holes from the failed coup marred some ministry walls.We foreign advisors, none of us more than 35 years old, huddled over clunky laptops in a cold room with cold coffee, amid whiteboards bearing crude diagrams in blue and red ink. We spoke no Russian, mostly, and the equally young ministers we reported to - Gaidar and Chubais and Vasiliev - spoke no English.
Bilingual aides would shuttle between advisors and ministers, up and down the tattered red carpet of the grand staircase of the baroque and battered Ministry building. They carried memos and reports of changing parliamentary blocs, and draft presidential decrees. No one was sure of the full consequences of the plan that was taking shape, but all were convinced that speed and scope were crucial.
We ate cabbage soup and rough bread in the Ministry commissary. At night, once or twice, we ventured to the converted sports palace for disco, where beautiful girls from Minsk and Kiev danced in suspended cages above our heads.
In August 1992, President Yeltsin announced the mass privatization of most of Russian industry. The managers and employees of each enterprise were to receive half of the shares, and the remaining shares went to the public as vouchers. The next year Gaidar was dismissed as first minister, and the window for structural economic reform began to close.
As the privatization program played out in Russia, the poor sold their vouchers to the less poor, the insiders of the nomenklatura class of former officials became rich, and the oligarchs were born. Was the program a mistake? Was there any real alternative at the time, for a country with no living memory of free markets or civil society? Were other economic decisions more to blame for the deep depression of the later Yeltsin years?
History is tragic. Often all available choices are deeply flawed.
Churchill said, in October 1939, after Stalin and Hitler had conspired to murder Poland: "I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma."
Now, in the oblique light of another Russian winter, in the peasant markets of Moscow, the matryoshka dolls are encased in the figure of Putin.
Stephen Harder is a resident of Rockport, living and working in China. In the early 1990s, he was a legal advisor to the Polish and Russian mass privatization programs.