In August of 1991, the collapse of the communist system in the USSR and it's neighboring
republics occurred. Out of the smoke emerged fifteen new republics and a union known as
the Commonwealth of Independent States. These new regimes faced formidable obstacles. The
collapse brought massive inflation which in turn forced the economy into a spiraling
decline and a state of almost worthless value. Many people were quick to point the finger
at their communist past, and even more eager to lay blame. Traditional communist
ideology was to "provide for every individual an equal amount of goods and services, thus
creating a state of equality amongst the populous" (Leveler, 16). Many people felt as if
their current hardships could be blamed on the communists and their economic policies,
specifically their "Core-Periphery" plan.
The communist sponsored "Core-Periphery" economic policy that was evident in Russia
was quite simplistic in nature. The theory, traditionally used to describe
inter-continental trading and production, was adapted for use in the Russian economic
zones. The theory was as follows; Areas which surround the capital (core region),
usually rich in one material or another, would be used for the extraction of raw
materials. These materials would then be shipped back to the capital in order to be
manufactured into goods. From there, the manufactured products would be shipped back to
the surrounding regions (periphery region) for resale. The citizens of Russia were
surviving on this system, but barely. The Core-Periphery policy was not efficient, nor
effective, for usually a product needed on one side of the federation, was produced at
the other end. Factors such as transportation costs and adequate use of human resources
was very inefficient and cost-consuming. Strong influences from the world urged Russia to
make the transition into the market-oriented economy. This seemed tempting, for the
market-oriented economy preached individual wealth and prosperity. Seeing no better
solution to their current economic woes, Russian policy-makers took the plunge.
By 1995, 4 years since the beginning of the transition into a market-oriented economy,
no satisfactory economic improvment had taken form. Productivity in many states such as
Turkmenistan and Belarus continued to fall (Table 2), and inflation was still at high
levels. Many new Russian capitalists in the regions chose to exploit what had already
been exploited in the past; raw materials. Looking to make a fast income, these new
Russian capitalists sold whatever they could get their hands on, for practically no cost
at all (Co-Existence, 146). Expropriation of state property, shady deals, and corruption
were rampant. Productivity in industries such as agriculture declined as farmers did not
want to take care of their land (Co-Existence, 146). Nobody had money to buy their goods,
so they questioned as to whether or not they should take the time to produce them. The
economy was contracting and in turn, people were actually getting poorer.
The newly separated states were yearning for economic growth and prosperity. This would
hopefully bring stability and a much needed improvement in the standard of living as well
as individual wealth. This however, has not been the case. Many of the breakaway
republics have actually experienced considerable negative growth. Many of the republics
made the transition to the market economy hoping to make the individual citizen
wealthier. In many of the republics this did not actually take place. In 1995, all but 2
of the 15 countries saw their net exports per capita fall drastically. Lithuania, once
with a net export per capita rating of 49.2, was experiencing one of -54.1 in 1995 (Table
1). On average the citizens now had less than before.
Many countries began to realize that they were in many ways still dependent on so-called
"mother Russia". The past Core-Periphery policy had made them heavily rely on internal
domestic trade. Being nothing more than satellite states in the centrally planned
economy, these countries were traditionally used for the extraction of materials or the
production of a singular industry. Their economies were not diversified. Traditionally
supplies had to be brought in, and this was still the case. Import statistics in the
newly independent republics have seen a drastic rise in totals. In 1992, the Ukraine
with a population of approximately 51 million people imported a total of 2.2 billion
million dollars worth of goods (Table 1). In 1995 however, the Ukraine with a population
less than what it had been in 1992, actually imported more; 5.6 billion dollars worth of
goods (Table 1). This rise in imports was also evident in Georgia, Lithuania, and
Uzbekistan (Table 1). For these countries, importing more than they are actually
exporting is proving to be a tough economic obstacle to overcome. In order to import,
they have had to borrow heavily from international sources. Without exports, they have
been lacking sufficient funds to make these re-payments. Diversification was not
happening rapidly enough to help them cope. Many feared that their debts will become so
large, that no matter what diversification occurred, it will be too late, thus making is
almost impossible to repay what they have borrowed.
The economic transition occurring in Russia has also led to political strife. Diplomatic
relations between many of the republics and the Russian nation have been drastically
reduced, if not completely severed. Ukraine, and Georgia have officially laid out in
their constitution that they will have no formal ties with their Soviet past (McLelland
108).
The Ukraine was fortunate to border one of the only Soviet access points to a large body
of water; the Black Sea. It was from this port that the former Soviet Union established
one of it's larger naval divisions, known as the Black Sea Fleet. Consisting of over 1700
warships of various sizes (McLelland 63), this fleet was one of the most dreaded in the
world. Aboard those ships, there were approximately 430 thousand employed operational
personnel (McLelland 66). Indirectly, in areas such as food production, and maintenance
staff at the shipyards, there were approximately 15 thousand people employed (McLelland
66). When the dissolution occurred, the Russian government declared that the Black Sea
would fall under its permanent control. To the newly formed Republic of Ukraine, this was
very alarming. To lose the Black Sea would mean to lose all the jobs that were directly
or indirectly associated with it. Knowing that the upcoming years may be harsh in terms
of economics, the Ukraine was not readily willing to accept a sharp blow to it's employed
work force. The Ukraine already had an unemployment rate of 7% (McLelland 24), and this
was straining the limited social safety nets. The last thing the Ukraine was prepared to
do was pay out more to it's people without getting anything in return. The Ukrainians
were yearning for a future free of any Russian grip. The Russians, on the other hand,
were still deeply in favour of upholding their Tsarist ancestors conquestial territorial
gains. Ultimatums were sent back and forth between Moscow and the Ukraine. Neither side
was willing to budge. Finally Russia backed down, and control was left to the Ukraine.
Nevertheless, during that period of stalemate, Russo-Ukrainian relations, diplomatic and
more importantly economic, suffered a great lose. Slander and many outcries of corruption
had been directed at many of the policy makers in both countries. Trade between the two
nations has also dropped to an all time low. Out of Russia's total exports, only a meager
1.7% gets shipped to the Ukraine (Dart, 117). In these harsh times of economic transition
in the region, one would expect that the two countries would be more willing to
co-operate for the goal of greater good.
The Russian republic has also seen it's fair share of strife; internally. Harsh economic
times, and less than admirable results from the transition to the market oriented economy
have paved the way for much political opposition. Communists, the former leaders of the
Soviet Union, were one of the first political movements to wage war against the newly
formed liberal government. Traditionally, communist ideology preached that "no citizen
will be in any greater position of status or economic wealth that that of another
citizen" (Perdues, 66), and that "all citizens shall live with ample food on the plate,
and little worries as to life" (Perdues, 93). For the communists the time of economic
hardship was heaven sent. Capitalizing on the citizens disgust in the shape of the
country would be no challenge. This has led to the communists waging wars inside of the
Russian parliamentary house. The Duma as it is known, is where most legislation and
debate over domestic and foreign policy goes on. It is in this institution that the
Communists have on numerous occasions attempted to gather support to impeach the liberal
government. The Communists' goal: dissolution of the current government, and
establishment of the old. Instead of attempting to reform and fine tune the new economic
policies, they wished to return to policies more consistant with the Communist ideology.
The Communists are not alone. In Russia itself, there has been a spawning of over 12 new
political parties (Co-Existence, 147) that pose threats to the current government's
stability. Amongst those parties, over 86% of the individuals do not approve of the
market-place economy (Co-Existence, 149).
Though Russia is constantly hindered by economic downfall in many aspects, that is not
to say that all is bad . Some of the new countries who have embarked on the long road to
growth, have in fact showed signs of improvement. Many of them have realized that
diversification is needed desperately. Both Uzbekistan and Georgia were traditionally
used as resource extraction states in the Core-Periphery economic plan of the centrally
planned economy. Since the establishment of independence, Uzebekistan now promotes a
large degree of exploration, and thus has a large oil and gas industry (Blij, 321) they
have also experienced growth in their new found service sector. Georgia is also
experiencing diversification. With its fertile lands, Georgia has harnessed it's
agricultural sector into producing tabacco, various fruits, and even timber (Blij, 150).
It also has a booming tourist industry because of it's warm climate and scenic beauty
(Blij, 150). Recent statistics show that in the year 1995, because of this
diversification, countries such as Uzbekistan and Georgia have drastically improved their
overall Gross Domestic Product when compared to statistics recorded in 1992. Uzbekistan
had a rating in 1992 of -11.1% and Georgia had a whopping -45.6%. In 1995, the totals
showed signs of great improvement; both at -5.0% (Table 2). Contraction was still
occuring, but at a slower rate. This in turn provided some hope. There was even a larger
increase in the country of Armenia where the 1992 statistic for GDP was -52.4%, and in
1995, it had improved to a +5.0% (Table 2).
The question of economic coexistance between Russia and its former republics still
remains a mystery. There are many stronger, much more controversial issues in Russia's
republics, when it comes to the issue of economics, independance, and growth. Many of
the citiznes in the breakaway republics are not eager to have peace and open relations
with their russian counterparts. The republics have yearned for independance for sometime
now. Russian Census data showed the majority (60 to 80 percent) of the ethnic populations
in Russia itself have supported movements for more autonomy. The root of the turnaround
in opinion from supporting the federation to wanting soverign nation states, has been
caused by one simple reason; nationalism.
Oppressed for many years, culturally speaking, the republics wanted to bring rise to
their ethnic beliefs and values. The intelligentsia, long considered instigators
threatening the Russian Federation, have been primarily concerned with cultural
objectives, such as defending the use of national languages or controlling the local
educational system, to ensure that history is taught from the perspective of indigenous
peoples (Drobizheva, 2). There is a direct relationship between identity and peace. In
an oppressed society, ethnicity assumes a stronger role, however, when democracy and
ethnicity are balanced, political stability is possible. As a result of a lack of
democratic institutions and means for dialogue, the former Union's inhabitants were
increasingly identifying themselves as members of ethnic groups rather than as citizens
of the Russian Federation.
Many of the breakway republics are filled with ethnic russians; Kazakhstan 41%,
Lithuania 8%, and the Ukraine 21% (Wells, 31). Hatred and distrust of these Russians is
infact growing. This is especially true when Russians are in the minority, as in the
republic of, for example, where Russians comprise 30 percent of the population
(Drobizheva, 2). In such circumstances, many perceieve the Russians as developing a
"hyperidentity," characterized by a low degree of tolerance for others and a feeling of
being threatened (Drobizheva, 3). Many of these Russians tend to consider themselves
members of a higher ethnic group whose rights are above others (Drobizheva, 3). This has
fueled mch anger towards the Russians, and in many regions the Russians are now being
alienated. Due to past abuse of rnatural and human resources, opression of fundamental
rights such thought, voice, and opinion, has led to a severe feeling of disgust towards
the Russians, and more importantly distrust.
In Short, the market economy did not bring any good to Russia immediately following its
implementation. That is not to say however, that growth and prosperity will not occur in
Russia and it's former states. Statistics as recent as 1995 have shown that since 1992,
on average, there has been an upward trend. Overcoming the obstacle of the core-periphery
based economy that was imbedded in the Russian culture, and the ideology aswell, has
proven to be no easy task. Relying on imports has taken its toll on many of the nations.
To combat this, the republics must build their own production base, and produce goods
domestically. Diversification will mean continued growth, and who is to say that the
newly sperated republics and Russia itself can not join forces in an effort to produce
one large core zone, with the world as it's periphery. As the nations utilizing the
market driven economy continue to increase and reap it's benefits, it was only a matter
of time before the inefficeint bankrupt communist system would have to topple. The key to
success in the region is not to expect too much too soon. Ultimately everything must
start somewhere, and in today's fast paced, market oriented global economy, so too must
the newborn Russian capitalist baby.
WORKS CITED
Drobizheva, Leokadia. Democratization and Nationalism in the Russian Federation.
Moscow:Russian Academy of Sciences, 1995
Mclelland, Kelter. Russia At It's Peak. New York:Puffin, 1995
Russia And The Republics. Co-Existence. 1994-1995 Edition.
Leveler, Eisen. Crash and Burn. London:Earl Of Johnstonson, 1995
Wells, Michael. Harsh Economic Transition. New York:The Regency, 1995
Blij, Muller. Geography; Realms Regions and Concepts. New York:Wiley And Sons. Eighth
Edition
Perdues, Gregory. The Red Menace?. Chicago:Bantam, 1995
Dart, Simon. A Seat At The Global Table. London:Willamson, 1996
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