Russia - A presidential campaign in a period of economic, political and social crisis

Jul/Aug 1996

The first presidential election in Russia since the collapse of the Soviet Union, in late 1991, was held on June 16. The unofficial final results showed a relatively low turnout of 69%. They gave a narrow lead to Yeltsin with 35% of the vote, against Zyuganov's 32% (the candidate of the KPRF or Communist Party of the Federation of Russia). The third in the poll was an outsider, former general Lebed, whose 15% score seemed to have been won at the expense of the far-right populist demagogue Zhirinovsky. This means that a second round will be held in early July, involving Yeltsin and Zyuganov. Until then, one can expect both candidates to embark in a frantic race to woo the defeated candidates for their votes. Already, as we went to press, a statement issued by Yeltsin indicated that Lebed had agreed to give him his support in return for a ministry and the sacking of Yeltsin's current War Minister, general Grachev.

What was then the background of this election? It must be recalled first that this presidential election was taking place only six months after a parliamentary election in which the government's candidates were overwhelmingly defeated by the KPRF. As a result the KPRF and its allies have been running the Duma (the Russian Parliament) ever since.

For a long time the polls gave the lead to the Zyuganov, Yeltsin's main rival in this election. At one point the press even reported rumours of talks between the government and Zyuganov about the possible cancellation of the election because of the "polarisation of society which is being exacerbated by the forthcoming election", and of a "compromise" which might be reached "in the name of stability". There was talk, for instance, of a compromise which would have involved Yeltsin staying on as president with Zyuganov becoming prime minister, thus avoiding the formality of elections. So much for the Russian "democracy" so much praised in the West! This is to say that while the bureaucracy's dignitaries use a slightly different vocabulary these days, their cynicism and contempt for the population remains unchanged.

Yeltsin benefited from the reiterated support of the imperialist countries' leaders - which enabled him to appear to all those who bank on foreign aid and loans as the only realistic choice. Yeltsin could also rely on the full backing of virtually all the media, on the support of the government propaganda machine, and on considerable funding from the large financial groups closely associated with the government. All this must have played an important, if not decisive role in helping Yeltsin to regain a narrow lead in the polls during the last period of the election campaign, and eventually in the election itself.

On the other hand, millions of Russian citizens hold Yeltsin responsible for the fall in their standard of living, the economic collapse, the gangsterisation of public life and the bloodbath in Chechnyia. For them, it is clear that the policy conducted in the name of "reforms" and the transition to a market economy has resulted in, and perhaps been solely motivated by, the shameless enrichment of a parasitic and privileged layer. These "nuovorichi" (nouveaux riches) or "new Russians", as the population contemptuously refers to them, are new only in name. Most of them have come out of the ranks of the old nomenklatura and its milieu from the days of the Soviet Union. The only difference is that their efforts to get rich quick now seem to know no limits and that they no longer have to hide behind the mask of what they used to call "socialism".

"Soviet nostalgia" and homeless children

The development in Russia of a phenomenon that the press calls "Soviet nostalgia" reflects the fact that society appears much harsher, more unjust and less egalitarian today than in the days of the Soviet Union. After all, in those days everyone could count on a free health care and education system, the guarantee of receiving a wage which was low but sufficient to live on, marginal unemployment and a low but stable standard of living. Of course, this egalitarian front was only a thin veil covering the deep inequalities which existed in the Soviet Union. But despite the censorship, the political police, the prison camps, and the shortages of all kinds, those past days seem to many people preferable to the political and economic chaos of today. For under the current so-called "democratic" regime, the population sees above all the dismantling of social welfare and public services, the swaggering upstarts and the open display of injustice while millions of workers and pensioners can no longer live on their incomes, which are being eaten up by inflation even before they are received.

A newsheet published by the authorities in the Ural region, which is unlikely to deliberately blacken the picture since it is intended for Western businessmen, reported in March that: "With unpaid wages and growing debts of the companies (in the region), the situation has deteriorated mainly in the electricity, non-ferrous metallurgy and wood industry sectors. Company debts in wages and family allowances total 661.6 billion roubles (nearly £88m). Wages have not been paid for more than two months at Sverdlovsk-Energo, at the mechanical construction plant at Vyssokogorsk, at Bogoslovsk Mines head office and at the non- ferrous metal processing plant of Kamensk-Uralsky (...) 154 billion roubles (£20m) in family allowances are paid with considerable delays. Workers and office staff in light industries are in a critical situation, without wages or allowances". Further on, the report indicates that "the town council of Berezniky is providing free hot meals for homeless children (...), whose numbers are increasing constantly. In 1989, there were 49 of them, all orphans. In 1995 there were 293. Many of them have simply been abandoned by their parents". In how many other regions are workers in a "critical situation, without wages or allowances" and the numbers of homeless children increasing?

Yeltsin critical of... Yeltsin

Those most affected by the drop in the standard of living have been those working for the public sector - the manual workers and even more so the office workers, small functionaries, collective farm workers and pensioners. Most intellectuals (teachers, researchers, doctors, artists, etc.), who often depend on public social budgets, have seen their incomes fall together with their social status, while their illusions about the possibility of enjoying the same standard of living as the western middle classes have quickly disappeared. Broad sections of the intelligentsia, who had carried Yeltsin shoulder high when he flattered them, to win their support in his struggle with Gorbachev, have since turned away from him - a trend which was reinforced by the war in Chechnya.

The government candidates' defeat in the parliamentary election in December illustrated Yeltsin's unpopularity. This prompted some among the "reformists" to distance themselves from Yeltsin when he announced his decision to stand for re-election in June. Some "liberal" politicians chose to support candidates of the so- called "third force" (Yavlinsky, Fiodorov, Lebed), or even Yeltsin's old rival Gorbachev, who all claim to be both opposed to the current government and to the return of the Communist Party to power. Others, such as Gaidar and Chubais, ended up rallying to Yeltsin, but only after he began to climb again in the opinion polls, following a series of statements aimed at proving that the candidate who was most vocally critical of Yeltsin's record was... Yeltsin himself!

In reality, the differences between the various candidates (including the populist far right demagogue Zhirinovsky, seem secondary compared to their unanimous rejection (Yeltsin too!) of the political and social record of the past five years. But in addition, despite the fact that the regime boasts of having abolished censorship of the press, the press is above all free to heap praise on the current government. As a result, the average voter watching television or reading the newspapers, might be forgiven for thinking that Yeltsin was the only candidate running.

This obviously allows him to occupy all the political space available. He claimed that he had increased wages and pensions and was going to have them paid on time. He announced a ceasefire in the war in Chechnya (which he started) the reality of which is still far from clear. Having signed "integration agreements" with Belarus, Kazakhstan and Kirghizia, he announced his intention to restore an economic space encompassing most of the former Soviet republics (even though he played a decisive role in the break-up of the Soviet Union). He promised that corrupt officials would be punished. He declared that the government would reconsider privatisations (which again were his own initiative) as everyone can see what consequences they have had for the economy and is aware of the way in which profitable companies were sold off to people close to the ruling cliques. He said that he would take steps to curb the western imports which have invaded the Russian market, and that, as the Communist Party and the "patriots" are demanding, the state would see to it that priority is given to the national production. Even the red flag, which Yeltsin had replaced by that of Tsarist Russia, has just been restored as a second official flag and will be flown as such in national events.

From Stalin to Gorbachev, the leaders of the Soviet bureaucracy have never hesitated to go back on their word whenever they have needed to. The current leader of the Russian bureaucracy, Yeltsin, is no exception to this tradition, political zigzagging being one of the conditions for survival at the head of the bureaucracy. Yeltsin may well be playing with the idea of the "Soviet past". But there is probably no more nor less reason to take his word today than there was a while ago when he was posing as the man who would guide Russia back to capitalism, after having been a top dignitary of the Soviet regime and its single party until he was 60.

Is this new move dictated only by electoral considerations? Only time will tell, but in the short term it offers Yeltsin the advantage of enabling him to beat the "Communist" Zyuganov at his own game. This is made all the easier by the fact that Zyuganov's programme is not conspicuous for its radicalism.

In the early days of the election campaign, Zyuganov accused Yeltsin of having "copied" his own programme as far as renationalisation and the integration of the former Soviet republics were concerned. And almost every day the CP newspaper Pravda accused Yeltsin of being a chameleon. On 20 April, for instance, it read: "It is an old habit of the former party nomenklatura which currently runs the Russian Federation never to have any firm conviction. Although they are red today, these whites will become brown if they have to, and if little green men arrive from outer space, they will go green. It does not matter for them what flag they march behind, it can be red or Tsarist... The important thing is power, the chance to plunder and do what they like with impunity."

Of course, this is the pot calling the kettle black. The former central organ of the late CPSU has expert knowledge in such fields. It could even accuse Yeltsin of being a "communist", for as Yeltsin develops the programme he has borrowed from Zyuganov, Zyuganov congratulates him for his decisions (such as the restoration of the red flag and the proposed fusion with Belarus) and makes more and more gestures addressed to the business and clerical milieus - which up to now have been the preserves of Yeltsin.

Thus the April 18 issue of Pravda opened with a Stalinist-nationalist style tribute to Lenin to mark the 126th anniversary of his birth. This was followed by a statement entitled "The KPRF's position on the religious question". After a reminder of the party's atheist nature, the statement asserted "total respect" for religion in general, and especially for the "Russian Orthodox Church", praising "its role in the formation of the state, the Russian national consciousness, the development of patriotism and the development of the spiritual and cultural traditions of the Russian people", and denouncing (just as the Orthodox clergy does) the "expansionism of Western preachers and other pseudo-religions". With regard to businessmen, Zyuganov likes to recall that he is on the board of one of their Moscow clubs and show that he is surrounded by "patriotic" entrepreneurs. And while Zyuganov's party, with the working class and popular electorate in mind, condemns the conditions under which privatisations have been carried out, at the same time, locally, the party's elected representatives sometimes oppose the renationalisations initiated by the authorities.

Recently, one could read in a liberal business weekly that "while the government in Moscow is trying to scare the liberal intelligentsia and company directors with the "red threat", the economic programme of the Communist Party is gradually being implemented by the Yeltsin administration in the capital and the provinces". It then reported the example of the metallurgy combine of Kuznetsk, in Siberia, or that of privatised companies which are indebted to the state in the south of Russia, which the government wants to renationalise despite the opposition of the Communist Party.

What improvement?

Of course, Yeltsin does not confine himself to stealing (without much difficulty) Zyuganov's programme. He seeks above all to present himself as the only major statesman that the bureaucracy can rely on, and the Western leaders provide him with all possible help in this respect by granting him official recognition as a "democrat".

But rather than attempting the impossible, by defending his record to the population, Yeltsin prefers to suggest that if the voters put Zyuganov in the Kremlin things would be even worse. Chubais, the former deputy prime minister in charge of privatisations, was quoted saying, for instance, that should Zyuganov get in, there will be a "bloodbath", whereas if Yeltsin is re-elected, not only will he prevent "the upheavals in society which would inevitably be produced by a change of political direction", but the situation will improve.

In any case, Yeltsin, his ministers and the press constantly drum out the message that the situation has already got better. Over the past year, the government and the press have been congratulating themselves on the fact that inflation, which had reached 2000% in 1992-1993, has fallen below 100%, and that the exchange rate of the rouble has stabilised against the dollar. They even boasted of an emerging economic recovery. At the end of April the IMF, which has granted Yeltsin £6 billion in credit and is giving him its full backing, declared that "the decline of this region seems to have come to an end", forecasting a 1.9% growth for 1996, following a fall of 20% in both 1994 and 1995.

What is the basis for such predictions of a "slight improvement"? Firstly the recovery of Russian exports, and secondly the restoration of certain links between the companies which are scattered all over the former Soviet Union.

A recovery of exports? They have never actually stopped and mainly concern raw materials and armaments. In fact they are both symptomatic of the state of the Russian economy and one of the instruments used to plunder it (which is the main obstacle to any attempt at kick-starting the economy): the majority of exports in fact serve to feed the foreign bank accounts of sham companies controlled by bureaucrat-businessmen, with the sums involved in these transactions almost never returning to Russia. These sums vary between £6bn and £12bn a year (between a quarter and a half of the Russian state's total debt to foreign banks). Obviously, this colossal flight of capital is driven by the enrichment of those who organise it (public or private businessmen) and of those in the state apparatus who help it along by turning a blind eye - not to mention the role of foreign bankers. Above all, however, this has devastating effects on companies, and as a result, on the Russian economy and state, which are bled dry by this financial haemorrhage.

The fact that the people who condemn this situation are often the beneficiaries, underlines one of the contradictions besetting the Russian regime. On the one hand, it wants to initiate the capitalist transformation of the economy, but on the other hand the private interests of hundreds of thousands of bureaucrats are undermining the basis on which this transformation could be carried out.

The expression of this contradiction is concentrated in the weakness of a central state which is the self-proclaimed champion of the transition to the "market economy", but which is incapable of establishing the legal basis for a return to private property, and above all of enforcing respect for any such legality. Not that there are no laws to protect property - rather there are too many of them. The different levels of the collapsing state power all claim to be sources of legal authority, but they all tailor the law to suit themselves. While the country is divided into "autonomous regions" - each one of which being a geographical fiefdom recognising no laws other than those of the local bureaucracy - the banks, large companies and supervising ministries also operate as so many fiefdoms, often in fact divided along the lines of the cliques in the state or government machinery inherited from the Brezhnev period.

This results in the state begin unable to collect income tax or indirect tax revenue, leaving the state coffers empty while filling those of the local fiefdoms, which thus find themselves in a stronger position to defy any central decision that does not suit them.

This crisis of power has also generated a national financial crisis. The state finds itself unable to work out a budget, to pay its administrative staff, to run its institutions and pay its expenses. This chokes the life out of companies, who as suppliers are not paid and as purchasers or employers find themselves unable to meet their commitments. The whole economy is living on credit. Workers are obliged to offer their company credit in the hope that their wages will be paid one day. Companies offer each other credit, but without there even being any means to measure the (colossal) amount of this inter-company credit.

Planning has been done away with, and along with it any central will to coordinate the operations of different companies. At the same time, however, there is as yet practically no market of the means of production, a business market where capital can be freely invested and withdrawn, allowing a true circulation of capital. Nor is there any "regulatory" mechanism of the capitalist market such as that provided elsewhere by bankruptcies and company closures.

The stock exchanges in Russia, the flourishing of which was seen by some as the very symbol of triumphant capitalism, do not in any way fulfil this role. Stock market transactions involve completely derisory sums compared to the scale of Russian industry, and are almost exclusively speculative.

The trend which seems to be taking shape is a kind of state control split between groups of companies - some of them being regrouped along the same lines as the "state corporations" from the days of planning while others have been put together under the control of state banks and placed under the protection of one clique or another in the top levels of the bureaucracy.

But this "state control", already divided up between several decision-making centres, increasingly runs up against the ambitions of the local bureaucracy. Many companies turn to the local authorities and end up falling under their control. The fight between Moscow and the regions for control of sources of wealth has taken an explosive turn in Chechnya, the war between the separatists and the Russian government in this republic having started as a showdown over who would get the region's oil revenue.

These centrifugal forces are a powerful factor in economic and political disorganisation and they are developing all the more freely as the central state does not have the means to oppose them, undermined as it is by its lack of resources and by corruption at the highest level. Even sectors which are decisive for the state, such as the army, are affected by this disorganisation. There are many illustrations of this, such as, for instance, the cases of soldiers who were sent to the front in Chechnya virtually unarmed, the daily reports in the press of troops who have not received their pay for months, or the case of the sailors who died of hunger at a navy base which was no longer being supplied with food by the army.

When millions of public sector workers have not been paid for months, when nuclear submarine bases are deprived of electricity because the ministry no longer pays the bills, and when companies to which the state is indebted are declared bankrupt, talking of the state budget becomes a farce. The 1996 budget was all spent as soon as it was adopted. The financial supplement of the daily Izvestia recently carried the headline: "The budget deficit for the first quarter was more than 1000 billion roubles (over £140m) in excess of what was expected", and published an impressive list of sectors thus left without resources.

The whole economic system is affected by this. According to the State Statistics Committee, "apart from employees in the administration, the sector hardest hit by wage debts is industry. In April this debt increased by 1000 billion roubles in just one week, and is now 11,690 billion roubles" (£1.6bn), and, in the words of the "Federal Department for Bankruptcy Questions" (yes, there is such a thing!), "more than 20,000 companies have stopped meeting payments". So that in May, Izvestia carried the headline: "The country suffers a budget K.O.".

So this is the recovery referred to by the so-called economic experts! The situation is such that the credit to Russia from the IMF and the western states, and the rescheduling of debts by the "Paris Club" bankers, are not just political help to Yeltsin at a time when he faces a difficult presidential campaign but are at least equally intended as emergency measures to avoid the bankruptcy of the Russian state and the possible resulting social backlash.

From "private" companies deprived of the state to renationalisation?

In this context of looming crisis, the privatisations initiated in 1992-93 have come to be seen in a very different light to what Yeltsin and the western commentators had anticipated. Not only is there now talk of renationalisation, but in the resulting debates in Parliament and in the press, it is now emerging that many companies which are legally private (starting with the biggest) are actually still run by the state.

A few months ago, the Minister of Privatisations was fired for expressing the idea that renationalisation was necessary in certain sectors. Today, not only is this what Zyuganov and the Duma are arguing for; a committee set up by Yeltsin has reached the same conclusions.

The chairman of one of the biggest private banks, Menatep, recently explained to a foreign business magazine: "Experience shows here that as soon as a company is privatised its assets are immediately squandered." The same chairman, interviewed by the business daily Kommertsant, specified that "big companies cannot exist outside the state. I cannot impose good management policies in a factory by simply invoking the fact that it belongs to me. It is easier for me to act as a representative of the state." A "representative of the state"? But isn't "his" bank "private"? The second biggest bank in the country, Unexil is also private, but, according to the same business daily, "it is also a state undertaking to some extent due to the nature of its shareholders (...), a string of public or quasi-public companies".

The links between banks and industry date from the Soviet era when each important economic branch (airways, energy, chemicals, housing, etc..) had its own "sectorial" bank. In the last years of "perestroika", these sectorial banks were allowed by the authorities to transform themselves into commercial banks. Other commercial banks came out as mergers of former state banks or were created from scratch by sections of the top political bureaucracy (like Menatep for instance). And when the state abandoned its monopoly of currency exchange, these banks took over and were the first beneficiaries. The period of the early 90s was one of galloping inflation. Those who had the means to do so sought to protect themselves from this by exchanging their roubles for dollars. The top bureaucracy obviously took part in this bout of speculative gambling, but with one enormous advantage: it was they who organised it via the banks they controlled. In 1994, when the rouble stabilised because it could not fall any further, the banks, still snubbing the productive economy, began speculating in state bonds. This was even less risky than playing on exchange rates: the banks lent back to the state what they had taken from it and the state guaranteed that their initial stake would double at least once every three months!

The bureaucracy's speculative frenzy through the banks and stock markets emptied the Treasury and absorbed all available resources, including those of companies. This had an even more asphyxiating effect on companies, which were already in a bad way because the collapse of the Soviet Union had thrown up borders in places where they had not existed before, thus breaking productive or commercial links with companies which were now "foreign".

It was during this period that the government decided to privatise small companies, and then big ones. Some were "immediately squandered" as the banker quoted above put it: having bought them at ridiculously low prices, speculators took them apart (selling the stocks, the equipment and above all the premises, as property speculation was all the rage) then scrapped them. Plundering, speculating and dismantling industry: the bureaucracy was setting about doing what it does best. This phenomenon threatened to take on such a scale, with the risk of this leading to a social backlash, that the central and regional authorities reacted by asking the banks to buy back these companies. They did this all the more willingly as the value of these companies was at its lowest ever level, and could seemingly only rise, thus making the operation profitable.

In other cases, it was big state-owned industrial groups which created their own bank, but this led to the same result: a new concentration of industrial property, privatised or otherwise, under the control of consortiums closely dependent on leading government circles.

In an article which sparked off some discussion in Russia, the January 10 issue of Izvestia described certain features of the system thus set up: "Whereas, in the days of the Soviet Union,(...) privileges were distributed in the form of consumer goods(...), the new system has issued "activity permits" (...), i.e. permits to get rich". Some petty bourgeois have joined the race to get rich quick, but "their period of "accumulation of capital" has generally ended in a crash". On the other hand, the newspaper argues, the nomenklatura, under the aegis of shareholding companies dependent on the state, has transformed itself into "a class of "trustees" whom the state has made responsible for developing the market". It is because these "trustees" are not private capitalists but employees of public groups or state-owned companies that Izvestia believes it can summarise the situation by speaking of "state capitalism". Privatisation, it says, has been a "privatisation of the state by the state", with the bureaucracy which considers this state to be its own, receiving not full ownership of it but the right to do with it as it pleases, i.e. a "permit to get rich".

This is obviously a far cry from the type of capitalism fondly imagined by a section of the former Soviet petty bourgeoisie, who expected it to bring rapid enrichment and accession to the same status as the well- established bourgeoisie in the West. Some petty bourgeois have at best, according to Izvestia, become "self-made men restricted to small and medium- sized business", but most were ruined even more quickly than their illusions "when the nomenklatura took things in hand again". In fact, while the nomenklatura has let a few crumbs go to "outsiders", it has never lost control of business as a whole.

Does the description this newspaper gives of the relationship between the state and the economy coincide with reality, and if so to what extent? At any rate, one can guess from the very terms used by Izvestia, the first daily newspaper to have openly advocated a return to capitalism in the Soviet Union, that the system it describes does not fulfil its wishes. This system, Izvestia explains, is phoney capitalism because, while having proclaimed "free enterprise" and the right to own property, it makes these rights subject to "permits" granted by the top political bureaucracy. And since this top bureaucracy dominates the top levels of a state which more or less controls the decisive sectors of the economy, it also controls the business bureaucracy and thus remains the main dispenser of privileges and of the means to get rich.

The people handing out "permits to get rich", according to the Russian press, are the bureaucratic "bosses" in the provinces and, even more so, the members of Yeltsin's security council (which is often compared in Russia to the Politburo in the Soviet Union under Brezhnev and Gorbachev) and the ministers in charge of "shareholder-purchased" state companies: Chernomyrdin, the Prime Minister, for the energy sector; Soskovets, the first deputy prime minister, for engineering; Korzhaov, the head of presidential security - and behind him Yeltsin's closest cronies - for the Unexim financial empire; Luzhkov, the "President of the Moscow Government" (the title the mayor has given himself) for the finance and media group Most, etc..

Those whom the press calls the "curators of the bureaucracy" have apparently thus reconstituted, under the cover of the state, pyramids of financial, industrial and commercial companies which are officially private but whose main or only shareholder is the state (or one of its sections), and which are interlinked by cross-shareholding, effectively preventing (as western capitalists regularly complain) the entry of unwanted shareholders.

So this is "how the nomenklatura has launched itself into the "edification of capitalism"" (the sceptical quotation marks are in the Izvestia headline).

Recently, Vek, a business journal, drove the point home with the headline: "Why wait for the communists before nationalising again?", giving several examples of groups whose renationalisation the authorities believe is necessary "for the defence of Russia's most essential interests". This paper considers that this is "a general trend of opinion which is gradually imposing itself throughout Russia", due to the "contradictions any administrator runs up against (...). Because of his position, he is obliged to be a liberal, but practice shows him every day that the theories in western manuals and liberal publications in Moscow have nothing to do with the problems he actually encounters." And the paper forecasts that, in the months to come, we should see "a massive transfer of property toward the state, represented this time by its regional bodies not its central ones. In the final analysis, privatisation will have encouraged not the birth of a competitive private industrial sector but the decentralisation of state property".

The central government, therefore, appears to be coming to terms with freedom won by local government at its expense. But this is probably because it has no other choice, given the balance of power between the centre and the bureaucratic fiefdoms. But this is also because, in the present economic and social chaos, it may see this solution as a means of preserving a minimum degree of coherence and cohesion in an economy on which the bureaucracy has always lived parasitically.

Unpaid wages and strikes

Behind the rivalries between the bureaucratic cliques, however, what is still going on is a massive transfer of national wealth from the working class and the peasantry to the bureaucracy. This transfer is all the more devastating for the poorest layers of the working classes - particularly for pensioners - as in the meantime the national revenue as a whole is still falling.

In mid-April, the State Statistics Committee announced through the press that "in the first quarter of this year the minimum living income increased 1.8 times compared to last year while the proportion of the population earning less than the minimum living wage went down: in March 1996, there were 34.5 million people in such a situation".

Obviously, this is more concrete than election speeches on "stabilisation". But even if an economic recovery were to occur - but after a fall in production of more than 50% since the disappearance of the Soviet Union - what would this mean for the quarter of the population who do not even receive the equivalent of £40 a month, when more and more essential goods are imported and sold at prices comparable to those in Western Europe? What is more, between the real income mentioned by the authorities and the income which is really received, there is the considerable gap between statistics and reality, a measure of which is given by the fact that millions of wage earners and pensioners receive their pay or pensions several months late.

In the letters pages of the weekly Argumenti i Fakty, a reader wrote recently: "On television the other day one of the president's advisers asserted that all wage debts had been dealt with. Thanks, it's very nice to hear that. But who bothers to check that this money has actually reached the people it was intended for? In our factory, the SMOu-13 plant in Nadym, we have already gone five months without wages. The lads are going mad (...). I don't think we need to look for our money in Moscow, we need to look much nearer to home: the director invests it in accounts paying interest and rakes in the surplus. Workers do not dare to poke around the company's accounts. We are not public prosecutors, and they would break us in no time." (It is true that this gas pipeline equipment factory is under the "protection" of the Prime Minister, Chernomyrdin, the former Soviet Minster for Gas and a "patron" of Gazprom, which enjoys a monopoly of gas exports).

Another case mentioned in the press was that of the VPK (military- industrial sector) company where 5000 workers have received no pay since last November and where, according to the local union leader, "people are so desperate they see the elections as a last chance". The article concluded: "here, everyone is going to vote for Zyuganov". It is no coincidence that Yeltsin promised, in all seriousness, to pay all outstanding wages and pensions: company directors, banks and top civil servants have been embezzling wages for years.

Not all workers, however, have waited for the elections to express their anger. Sometimes they have taken strike action, blocked trains and town centres. According to the Russian Union Federation, in the first ten months of 1995 alone, non-payment of wages increased by 136% and led to nearly 6000 strikes. The movement has not slowed down since. There was a strike by 900,000 miners (at the same time and for the same reasons as their comrades in Ukraine), a teachers' strike, an airport workers' strike and strikes at giant industrial companies like Promtractor in Cherboksari, Zil in Moscow and Kamaz in Briansk. On April 17, Pravda carried the headline: "A wave of strikes breaks out in many regions of the country", listing most of the companies in the maritime region (Vladivostok), hospital workers in Moscow and some fifty regions, bus drivers in Archangelsk, engineering workers in Yaroslavl, and companies in St Petersburg, Riazan, Saratov, Khakassia, Orenbourg, Magadan, Adigheni and the regions of Kemerovo, Talbov, Daghestan and Altai.

Every day the list grows longer (even workers employed by the Academy of Sciences went on strike to demand their pay). This is not surprising: the authorities have listed 70,000 institutions and firms (each of which may concern several sites and thousands of workers, or even over a hundred thousand workers, as in the case of Kamaz) which are behind in the payment of wages.

The Work Inspectorate claims to have carried out thousands of checks on companies - checks which Moscow has speeded up in the course of the election campaign - with little result overall. The Work Inspectorate in Vologda (north of Moscow), quoted by Trud, estimated the sums withheld by state sector employers in its region to a total £20m at the end of March. 388 cases had been filed against these employers, but the majority had got nowhere, either because the management refused to pay the fines, derisory as they are (one director got a £350 fine for instance), or because the Work Inspectors had been subjected to pressures and threats of all kinds. Across the country, according to the Russian president's own Inspection Department, barely 120 bank managers have been fined in this way.

In March, due to the election campaign, the state's debts to its workers had officially fallen from 4800 to 2700 billion roubles. This did not last. According to the State Statistics Committee, "despite the steps taken, in mid-April the state's debts to its workers are still around 3400 billion" (£450m). This is for the state sector alone. The banks, for their part, were withholding 400 billion roubles in wages. These enormous amounts, when invested in accounts, yield interest at current Russian rates (up to 100% a month). The interest earned by the swindlers is therefore completely out of proportion to the fines they risk: a total of 1.6 billion roubles in fines for 1400 billion in unpaid wages recovered by the State Work Inspectorate.

The working class lacks the leadership it needs

The attitude of the international bourgeoisie is a fairly significant indication of the way the situation is developing in Russia. The leaders of the imperialist world continue to support Yeltsin and to turn a blind eye on the repression in Chechnya, the growing poverty in Russia, and the unreliability of Yeltsin himself. International institutions such as the IMF periodically grant more or less substantial loans to the Russian state. This is a form of support (and a very important one) to the ruling political team. Apparently the international bourgeoisie, although it has lost some of its initial enthusiasm for Yeltsin and his team, nevertheless considers them to be, if not the best, at least the "least bad" in terms of preventing Russia from sinking even further into anarchy.

Also significant, however, is the fact that western investment remains very low. The international bourgeoisie's political representatives are pushing as hard as they can at the wheel to try to ensure that the "reform" in Russia, i.e. the economic and social counte-revolution, goes through as quickly as possible and creates the conditions for the economy to function on a capitalist basis. But the capitalists are demonstrating by their caution that they do not consider that this has been achieved yet, or at least that it has not gone far enough. They are taking out options for the future but are not risking their capital in long-term investments.

Ten years after the beginning of perestroika and five years after Yeltsin came to power, this transformation has not yet been completed despite the fact that, unlike his predecessor Gorbachev, Yeltsin openly displayed his desire to make Russia a capitalist country.

The most visible aspect of the changes already made is obviously the emerging category of business sharks and nouveaux riches, linked to the Mafia or otherwise, ex-bureaucrats or otherwise. This embryonic bourgeoisie is prominent on the economic scene, as well as in luxury hotels and restaurants. It shocks the majority of the population with the way it has got rich quick and flashes its money around, with its Mercedes and BMWs. But it is not this social layer which dominates the Soviet economy.

The hard core of the economy is still controlled by cliques in the bureaucracy, some of them having laid their hands on entire regions while others have grabbed pieces of the old Soviet productive apparatus. They too display - albeit more discretely - their thirst for wealth, but their leading role in the economy is based on their position in the state apparatus, or one of its rival fragments, and not on their capital.

It is difficult to gauge the extent to which this delay in the further progress of the counter-revolution is due to the bureaucracy's internal contradictions regarding the means and speed of change, how much of it is due to the fear of provoking reactions by the proletariat and the population in general, or, more generally, how much of it is due to the fact that the economic and social transformation of such a huge and multiform society is not an easy task. Added to this is the fact that the gigantic nature of the industrial companies which were created by planning makes it difficult to split them up into sectors which are profitable from the capitalist point of view. And there are many that the market would inevitably condemn to death. While the bureaucracy is not really challenged by the proletariat, it is doing a better job at ruining the economy by plundering it, than at transforming it on the basis of capitalist relations of production.

At the end of the day, it is the unbridled desire of the bureaucracy to get rich which is the driving force behind the current counter-revolution. But this race for individual enrichment has, over the past few years, resulted in the economy being constantly and systematically subjected to plunder. The only reason why the economy is still functioning at all is because its essential sectors are still not operating on the basis of profit and are still more or less under state control, whatever the various legal forms are, under which state control is exerted.

However much the productive machinery is divided up between the different cliques of the bureaucracy, it is still these bureaucratic cliques which are the dominant force in the economy. The nascent bourgeois class is still just buzzing around in the shadow of the disintegrated state economy, and living parasitically off it.

The very duration of the counter-revolution means that the proletariat still has the possibility of intervening in a process where it has so far been simply a spectator and, above all, a victim.

Judging from the number of strikes, the problem is not the fighting ability of the working class, even though the situation is such that the strikes taking place are all defensive ones.

The problem is political. Even if the working class had the means to launch an offensive struggle to try to restore at least its former conditions of existence, this in itself would not be enough. The accelerated ruin of the former Soviet economy and society sharply poses the following question: what social class, on the basis of what policy, is capable of making the economy work?

The bankruptcy of the bureaucracy, which is responsible for the present crisis, is blatantly obvious. The bourgeoisie is as yet incapable of taking over, and if it succeeded in doing so, and if the economy was consolidated on a capitalist basis, this would certainly result in an even bigger drop in production. On the other hand, for the time being, no political force is proposing to the former Soviet working class the idea of vying for control of the economy and society using its own means.

Zyuganov's communist party is content to harvest the discontent to oust Yeltsin. But his policies are in no way different, or to be more precise they amount to the same lack of policy. As for the organisations leading the scattered defensive struggles of the working class, these are union organisations which are either pro-Zyuganov or pro-Yeltsin. In other words they have neither the political will nor the means to propose a clear policy to the working class.

The only alternative facing Russian society at the moment is either the acceleration of the current counter-revolution and the stabilisation of a profit-driven society - which would involve making no less than 30 to 50 million Russian workers unemployed, demolishing a large proportion of industry, which was set up on the basis of state control and cannot survive without it, and relegating Russia to the rank of an underdeveloped and dependent country - or the prolonging of the current situation, with sterile struggles between bureaucratic cliques, the continuing decline of production and the even more complete break-up of Russia and everything the Soviet Union used to be. In other words, a choice between the devil and the deep blue sea.

The bureaucratic anarchy, and the central Russian state's inability to re- establish its authority allow the proletariat more time. But whether the proletariat will be able to seize the opportunities offered by the continued weakening of the state apparatus and by the anarchy within the ruling social layer is not just a question of militancy. It is above all a question of political perspective, a question of having a programme, in other words a question of having a party.

The ex-Soviet proletariat remains politically disorientated. This is above all the result of several decades of Stalinist dictatorship which, behind its false veil of "communism", has drowned in lies and physically rooted out any proletarian revolutionary tradition. The conditions of the collapse of the Stalinist regime as a result of a political crisis internal to the bureaucracy, have only made the problem even more confused. The political forces which have appeared publicly thanks to the relative freedom of expression resulting from perestroika have all been reactionary.

Even the least reactionary among these political forces presented the return to "democracy" and "freedom" as being well worth the sacrifice of the planned economy. But today the economy is in ruins, and "democracy" is limited to Yeltsin's sad buffoonery. As for freedom, what does this mean in Chechnya or even in the rest of Russia? It is at best an abstraction until the proletariat seizes the opportunity to organise itself and defend its own political perspectives.

The growing number of political movements, which includes increasingly discredited pro-western democratism, the revival of pro-Stalinist tendencies, different forms of nationalism (Russian or non-Russian) and all variants of the far right and monarchism, cannot hide the fact that no organisation has appeared as yet whose purpose is to defend the political interests of the proletariat.

As the capitalist transformation of the economy has not been completed, the Russian working class, although weakened, has not significantly fallen in numbers. But the extra time allowed by the slowness of the counter-revolution can only prove useful for the future if it is used to develop a genuine communist organisation, in other words a revolutionary organisation basing its programme on the fight against the return of the bourgeoisie through the overthrow of the bureaucracy.