A MORE PERFECT UNION

by Michael Hammerschlag

Moscow News - Dec’93

Ironically as the revolt erupted, Yeltsin was taking steps that were the hope of every hardliner, re forming the Union as a political and perhaps economic entity in the CIS. The single greatest source of economic dislocation has been the break-up of the Union because of the collapse of many interdependent businesses, which Unionists hope to reverse.

Reagan reaped great mileage from his 1980 "Bear in the Woods" commercial, which speculated whether Russia could and should be trusted. He proceeded to examine this idea by throwing rocks at the Bear for the first 5 years. Lately Russia has been a Bear on the Path, not terrifying but obstructionist, insisting that they be dealt with, lest they occasionally maul someone (as in Abkhazia and possibly Azerbaijan) or eat someone (as in the late Democratic-Islamic Tadjikistan). A few branches of berries, a few displays of respect, and the newly independent states were safe. Ones that didn't and threw rocks at the bear (Ukraine, Estonia, Georgia, Azerbaijan) paid the price in real money for their oil and gas (instead of Soviet prices), or found their enemies armed with an endless stream of Russian weapons. Anti-Russian nationalists from Gamsakhurdia to Elchibei to Tadjikistan's DI leaders found themselves run out of office by suspiciously spontaneous uprisings. Initially believed to be semi-autonomous actions by Russian military commanders reextending their influence, now it seems that they more were a centrally directed policy of low-key and clandestine manipulation.

Across the old Soviet Union, Russia is beginning to reassert itself. Azerbaijan's and Georgia's humiliating return to the folds of the CIS are testimony to the direness of their straits (both countries were losing wars), the hazards of independence, and wisdom of Russia's patience. In the bitter inverse logic of old Soviet mind-games, both Georgia and Azerbaijan were forced to seek the protection of the country that had helped bring them to their knees: Mother Russia. But having helped to create their weakness, Russia is hamstrung by the dependency and instability that accompanies it. Ukraine, the most petulant and distrustful CIS nation, has been devastated by up to 70% a month hyperinflation: the lowly coupon is now only 31,000/$ and monthly wages only $3-5. Absolutely desperate, Kravchuk initially agreed to finally transfer the Black Sea Fleet and the Ukrainian nukes to Russia, provoking a storm of outrage from nationalists. Neither event may ever happen, but Ukrainians aren't fulminating against Russia anymore (the destruction of Parliament removed their greatest irritant and provided an object lesson in the risks of imperial displeasure). In Moldova, the government requested Russian assistance in the Trans-Dniester conflict: Russian troops stopped the fighting but institutionalized the partition of the country. Russia's change of direction over Eastern European NATO membership is wholly rational: why should they approve of neighbors joining what is still a military alliance against Russia?

Now the controversy is whether the CIS should have a full economic union again--share the same currency, and whether that will undo the economic damage that the Soviet Union's breakup caused; although the stupid, painful, and brutal (invalidating 80% of Georgia's money) old money withdrawal in July was specifically designed to destroy the rubble zone. Advocating a currency union are Chernomyrdin, Gerashchenko, and Shokhin; virulently opposed are Gaidar and Fyodorov, who seem to have prevailed. It's probably too late for a full 1:1 currency union (as the consensus seems to be), because as sick as it is, Russia's economy is one of the healthiest in the CIS, and tying it to weaker currencies and systems might be costlier than the benefits of easy trade and payment. Then again, Russia imperiously demands the power to control all banking, deficit, and customs policies in the ruble zone; expert guidance from a Central Bank that still takes months to process a simple transfer and managed to devalue the ruble 10-fold in a year. Seeing a return to total dependence on the whims and vagaries of Moscow, several republics have rejected this "economic slavery", although they are desperate for economic union with somebody larger and more stable. Kazakhstan, Armenia and Azerbaijan are making the torturous decision to introduce their own currencies (Belarus may follow), though if their new currencies fail badly enough they may be forced to crawl back to the Central Bank, no matter what the terms. The Moscow separatists are terrified that destabilizing diseases will spread from the outside to Russia, though there's plenty of evidence it would operate in reverse (as the IMF believed when they encouraged nations to mint their own currencies).

At the basis of the dispute is whether Russia should be the center of a Union or be independent, with powerful impulses pushing for Union. Russia has the military might, the historical reflex, the bribe of resources, and the raw lust to re form a Union, economic and otherwise. But now they don't have the wealth, cruelty, or dirt-cheap energy reserves to maintain it. With minimal effort the military was shrewdly and nefariously able to push several errant ex-Soviet republics back into Russia's embrace. But in the long run, Russia probably doesn't want the responsibility, risks, costs, and work of controlling them.

Michael Hammerschlag is a political commentator and radio correspondent in Moscow.