After the failure of shock therapy what hope for Russia now?

For Russia it was the year that everything fell apart

For Russia it was the year that everything fell apart. The economy hit meltdown point on August 17th following devaluation of the rouble by the young and inexperienced prime minister Sergei Kiriyenko. Soon afterwards almost every aspect of Russian society was in crisis.

The lowest point was reached in November when the liberal politician Galina Starovoitova was shot dead on the staircase of her apartment building on the Griboyedov Canal in St Petersburg.

Her funeral was attended by scores of leading politicians who swore her death would make them firmer in their resolve to oppose the communists and right-wing mafiosi who have created a major role for themselves in Russian politics.

Former Prime Minister Viktor Chernomyrdin and former deputy Prime Minister Anatoly Chubais called for unity among the democratic forces but just a few days after Ms Starovoitova was buried the New York Times revealed that the two men had something else in common.


Both had, according to the newspaper, been the subject of investigation by the Central Intelligence Agency which had gathered "conclusive" evidence of the personal corruption at the apex of the Russian political triangle.

Many observers had put Mr Chernomyrdin's wealth at around $5 billion. It became known that he had charged one German businessman a million dollars for the privilege of meeting him. Mr Chubais's reputation had plummeted following a payment of $90,000 he received as an advance for his work on a book on Russian privatisation.

The money came from a publishing house connected to a former deputy prime minister, Vladimir Potanin, who had been remarkably successful in the "privatisation auctions" of important state companies. It is a measure of the current economic crisis that Mr Potanin is now asking the state to take some of its companies back.

While the CIA is not releasing details of its dossiers on the two men, it is claiming that its information is far more substantial than the examples given above or than any of the other claims of corruption which have been made against Mr Chernomyrdin and Mr Chubais in the western or Russian media.

More significantly, when the dossier on Mr Chernomyrdin was sent to the office of US Vice-President Al Gore, it was returned to the CIA in Langley, Virginia, with what New York Times writer James Risen described as a "barnyard epithet" scrawled across its cover. Obviously the US administration didn't want to know too much about the people it was dealing with.

But western tolerance of Russian corruption appears to have played a major part in fuelling the current crisis. The optimistic view was that the robber barons of Russia's new wild capitalism would eventually get wealthy enough to go straight and all would proceed nicely from there.

This was wishful thinking. What really happened was that the corrupt became more corrupt. The European Union Court of Auditors, for example, announced this year that perhaps $5 billion sent to Russia as aid for improving the safety of nuclear installations was either misspent or stolen. It is known that large sums from other international organisations destined for different projects in Russia met a similar fate.

If Russia was the addict as far as the abuse of financial aid was concerned, then the West was the pusher. Western institutions and countries believed that Russia's economy was improving and they believed this simply because it was what they wanted to believe.

Economic shock therapists who, only a few months ago, were claiming that their measures had been successful, are now denying that these measures were ever implemented in the first place.

The shock therapists have blamed the International Monetary Fund for what has happened. One leading commentator, while admitting that US policy in Russia had failed, came up with the bizarre message that "just because it failed does not mean it was wrong".

If any lesson is to be learned from the horrible mess in which Russia finds itself, it is that turning a blind eye to corruption simply does not pay dividends.

In the meantime ordinary Russians face hardship this winter. Deaths by starvation are most unlikely to occur in significant numbers but a further deterioration in dietary quality is very much on the cards. A more serious aspect could be the fuel crisis which has left many thousands, particularly in the far east, without heating in the run-up to that region's extremely fierce winter.

Not surprisingly, the crisis has brought its political developments in the run-up to the parliamentary elections in 1999 and the presidential elections in 2000.

The moves towards unity by Mr Chernomyrdin and Mr Chubais have understandably been rejected by another democratic leader, Grigory Yavlinsky, who is not under suspicion of corruption.

Moscow's powerful Mayor, Yuri Luzhkov, has founded a new political party for the Duma elections as a prelude to his standing for the presidency. His Otechestvo (Fatherland) grouping is strong on patriotism. Mr Luzhkov is himself a committed Great-Russian nationalist, who wants to take Crimea back from Ukraine and has been involved in expelling non-Russians from Moscow.

General Alexander Lebed is making tough statements from his mammoth fiefdom of Krasnoyarsk in Siberia and there are those who believe that Prime Minister Yevgeny Primakov may also be a strong candidate to replace Mr Yeltsin.

The communists under Gennady Zyuganov have undoubtedly been strengthened by the crisis and have been emboldened to do some things which bear a strong similarity to fiddling while Moscow burns.

A viciously anti-Semitic statement by one communist deputy, General Albert Makashov, has gone unpunished by the leadership and in an even weirder move the Duma has voted to reinstate a huge statue of Feliks Edmundovich Dzerzhinsky in the centre of Moscow's Lubyanka Square. Dzerzhinsky, a Polish nobleman-cum-communist, was the founder of the Cheka, the forerunner of the KGB. His return to the spot from which he was removed in 1991, the legislators insist, will be a signal to criminals that their days are numbered.

Although Mr Zyuganov and his allies are most likely to return to the Duma in numbers even stronger than they do at present, the likelihood of a communist being elected president seems dim.

As the country has stumbled from one exigency to another, its president has been seen as an increasingly pathetic figure. The country's supreme court has done Mr Yeltsin and Russia a favour by declaring that he cannot stand for re-election to a third term in the Kremlin. His terms in office will soon be open to the judgment of history.