The Tragedy of Russia’s Reforms

The Soviet Union was a world superpower that helped to shape and define almost the whole 20th century. The Soviet Union formed out of the ashes of World War One, was a victor of World War Two and went on to challenge the United States as a world superpower during the Cold War. But After the fall of the Berlin Wall, the Soviet Union itself began to unravel. Its own constituent republics began to issue declarations of independence. Demonstrations against the government and the party intensified. The economy worsened, food shortages became a problem, and the crime rate began to skyrocket. Gorbachev, caught between popular demands for more radical reform and party demands for the re-imposition of strict control, failed to satisfy either side. Ultimately the once proud super power fell and gave its way to the Russian Federation as power was handed over to Boris Yeltsin. Yeltsin served as the president of Russia from 1991 until 1999. Though a Communist Party member for much of his life, he eventually played an instrumental role in the collapse of the Soviet Union. Yeltsin won two presidential elections, the first of which occurred while Russia was still a Soviet Republic. Yeltsin's leadership started with great hope for Russia to leave the gloomy days of Communism behind and head towards a brighter future namely a Capitalist economy. But it did not take long for this dream to turn into a nightmare. Yeltsin's eight years in power were characterized by widespread poverty, corruption, enormous mismanagement of the country's resources, the economic hardship of millions of ordinary Russians, the rise of a new breed of ultra rich oligarchs and a host of other problems and grievances. This documentary explores Yeltsin's legacy and the transition of the Soviet Union to Russia as we know it today.

TIME CODE: 00:00_05:00

Narration: As the Berlin wall collapsed in 1989, so did the once superpower of the Soviet Union. The Communist Party leader, Mikhail Gorbachev under his policy of Glasnost, ushered in a new era of openness with the West. And under another of his policies, Perestroika, he attempted to navigate his countries communist economy into capitalism. By 1991, Perestroika was failing and along came the new Russian states first President, Boris Yeltsin. This documentary tells the story of the eight years of Yeltsin’s leadership and of Russia’s attempted transition from Communism to Capitalism. It is an often tragic story, of the fall of a once proud superpower, the hardships of million of ordinary people and the rise of a new breed of ultra rich oligarch. It is also the story of how Russia has become the state it is today.

A two hour flight East of Moscow, on the border of Europe and Asia, lies Russia’s fourth largest city, Yekateringburg. Traditionally a centre of heavy industry, it is the capital of the Ural region. And also the home of The Russian Federation’s first President, Boris Yeltsin.

A museum dedicated to the man, was opened just a few months ago. A Museum guide, Dmitry Pushmin gave us a tour. At the entrance quotes by some of the world’s most powerful people.

SOUNDBITE [English] Dmitry Pushmin, Guide, Boris Yeltsin Presidential Centre: “The quotes are dedicated to Boris Yeltsin and his role in the history of the last quarter of the 20th century.

- I think I know who that is.

Yes of course, its Tony Blair, the Prime Minister of the United Kingdom.

- What does he have to say?

He says that Yeltsin was a remarkable person who understood the necessity of democratic and economic reforms. And he made a key role in the tremendous moment in Russian history. 42nd President of United States of America. “History will be kind to my friend Boris.”

Narration: As Dimitry showed me around the Museum I was beginning to get the impression that this was less an exhibition depicting a fair history of Yeltsin’s time in power. But more a kind of shrine set up to worship him.

Even though, as I was soon to learn, Yeltsin remains deeply unpopular on the streets of Russia, in here, even his failures are turned into victories. Towards the end of his leadership he famously frequently appeared drunk at public events. Instead, here, only loving romanticising images. The war in Chechnya, which he started, banished to a small back room. Nearly 100 000 people are estimated to have died. But, the highlight of the exhibition?Surely this stirring video.

Voice [English] Back ground: “There was a new party leader called Mikhail Gorbachev. With his help the Berlin Wall was destroyed and the Iron Curtain was raised. Also with the help of Gorbachev they tried to return the country to a normal way of development. This was called Perestroika. But it turned out that the system cannot be reformed. It can be only destroyed. The country needed a different leader. This leader came: the President of Russia, Boris Yeltsin. Who ended authoritarianism.And chose to follow democracy.That is the history of new, free Russia.”

Narration: The Museum is deeply disturbing in it’s shamelessly one sided, propagandistic homage to Yeltsin. All criticism is white washed. Only hero worship remains.

SOUNDBITE [English] Dmitry Pushmin, Guide, Boris Yeltsin Presidential Centre: “This is the original cabinet of the first President of Russia, Boris Yeltsin. It was transferred from the Kremlin to Yekaterinburg. And we are lucky to have a piece of the Kremlin inside of Museum. A Christmas Tree. It’s official.

- Why is Boris Yeltsin such a great man?

He was the first President of Russian Federation and the first who….. So his role is big because he is the first. Then he tried to…. He tried to make a transition from the Communist order to Democracy. And a lot of freedoms.”

TIME CODE: 05:00_10:00

Narration: Perhaps it is not surprising that Dmitry struggled to remember what is great about Boris Yeltsin. We he left power in 1999, by some estimates his approval rating was as low as 2%. Surely one of the most unpopular leaders of any country, of any era. Not that you’d get that impression, from this museum.

We’d been driving for a few hours out of Moscow, on our way to find a rather different opinion of Russia’s first President.

At a large house in the countryside, we meet Alexander Korshakov, Yeltsin’s former confident, advisor and bodyguard.

SOUNDBITE [Russian] Alexander Korzhakov, Boris Yeltsin’s former chief security officer: “I’ve worked for eleven years with Yeltsin. And when we were together on that tank, it was 1991. There was such revolutionary euphoria in those times, in the country. We thought we were going to be rid of the socialist and communist system that everyone was tired of.And we will live well, like in Europe. But instead, it turned from bad to worse.”

Narration:Korzhakov can be seen here, in a famous image, to the right of Yeltsin. The year was 1991. A coup attempt by Communist hardliners against the Gorbachev government.Yeltsin, delivers a famous speech helping to rally supporters in order to defeat the coup. An important event in Yeltsin’s bid for power. Five years later, Korshakov, also a former KGB General was finally sacked by Yeltsin. He then published an insider’s account of the workings of the Russian government in the early Yeltsin years. An account depicting a deeply corrupt and undemocratic government.

SOUNDBITE [Russian] Alexander Korzhakov, Boris Yeltsin’s former chief security officer: “Still some people have it good. Some people have it bad. I built this house when I published my book in 1997, for around two million roubles. But I was doing that in a country of very poor people. And there were so many of them around.”

SOUNDBITE [Russian] Boris Yeltsin, Former President of Russia: “For every Russian citizen, we will transform Russia from crisis to prosperity.For Russia to be great. And to live as good as it’s used to. For a new Russia!”

Narration: Yeltsin, was elected in 1991. The first leader of a non-communist Russia. His most pressing concern was fixing the economy which had stagnated under communism, many of the shops were bare as only basic essentials could be bought. He enlisted the help of a new, young group of economists, led my YegarGaidar.

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “The team around Boris Yeltsin and YegorGaidar and others had a very clear strategy, a very clear perspective of where to go, what to do, how to proceed. And the question is whether that was what the rest of the country wanted. I think it was exactly the opposite of what the rest of the country wanted. But they had power. So these were people who were a small minority but at the same time a very well organised, determined and strategically thinking minority.”

SOUNDBITE [Russian] Alexander Tarasov, Historian: “They were hugely unpopular. The Yeltsin and Gaidar cabinet, as it was called, practically made only one thing. They simply liberalised the costs and prices. But they never raised the salaries. So the prices grew, dozens and even hundreds of times.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “They speeded up privatisation. They speeded up deregulation. And they opened up the markets almost immediately. And this was the shock therapy. The initial shock was really devastating because people really had there living standards collapsing.”

Narration: Under these reforms Russia lost 50% of its GDP, whole sectors of the economy disappeared, unemployment rose dramatically, as did inequality. Some commentators have stated, that the economic downturn was worse than the Great Depression in the United States in the 1930’s.

SOUNDBITE [Russian] Alexander Tarasov, Historian: “People were walking into shops like ait was a museum, just to have a look. And if before they used to buy half a kilo of cheese, in 90s, I saw personally people who were buying two slices of cheese in the shop. They simply could not afford to buy any more.”

TIME CODE: 10:00_15:00

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “Quite a few people had to change their professions. They had to kind of downgrade their professional status. You can imagine the people who were engineers, scientists and very skilled technicians, traders.”

Narration: Meet Oleg Golubev. During Soviet Times he worked as a researcher in a Physics laboratory. He now runs his own business in Moscow, fixing computers.

SOUNDBITE [Russian] Oleg Gulubev, Businessman: “As to life before Perestroika, for simple people it was good. Because they got enough food and whatever they needed.”

Narration: Like many people we spoke to, Oleg spoke fondly of Soviet times but says it was clear that the country needed change.

SOUNDBITE [Russian] Oleg Gulubev, Businessman: “I have to say that Yeltsin’s reforms affected people differently. My relatives living in Yekateringburg, lost everything and I had to support them for a while. The beginning of the reforms brought chaos and mess. Only those who were smart and cunning enough were able to survive.”

Narration: Oleg says that under communism it was effectively a crime to try to earn large amounts of money and that he has enjoyed the greater freedom that being allowed to run his own business has brought.

SOUNDBITE [Russian] Oleg Gulubev, Businessman: “The nineties were different times. I didn’t feel depressed because my business was doing ok. But most of my friends were completely depressed. And there were people who killed themselves or became alcoholics. There were people who fled the country or became criminals. It was quite similar to the wild west of the middle of the 19th century. There were crowds of people trying to get rich by any means.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “The reforms, instead of addressing the real problems of the Russian economy and the late Soviet economy was facing, they were designed to achieve some other goals that had very little to do with the actual problems that the Soviet Union had in the 90s.”

Narration: Grigory Yavlinski is the founder of YABLOKO, a major political party in Russia. Twice a Presidential candidate, he famously wrote the 500 days program. An alternative economic plan for Russia’s transition from Communism to Capitalism. Under his plan, the changes would have happened far slower and in his view with a fairer distribution of the country’s wealth.

SOUNDBITE [English] Gregory Yavlinski, Founder, Yabloko: “- So why did the Government choose their plan over your plan?

I think there were several reasons. First of all, incompetence and secondly that was the advice from the IMF and the World Bank. That kind of a plan had a name. it was called Washington Consensus.”

Narration: The Washington Consensus demanded the immediate privatisation of the massive State run Soviet industries. Initially the plan was for Russian people to directly share in this privatisation. But, in reality because of the dire economy, few Russians had any money in which to purchase their share.

SOUNDBITE [English] Gregory Yavlinski, Founder, Yabloko: “So there was only one way to distribute the property, crony capitalism. Crony way of distributing the property. To give the property to the friends. And that was the beginning of criminality.”

Narration: Instead of the country’s wealth being shared, a small group, at the right place at the right time, were about to hit the jackpot.

Anatoly Chubais, Yeltsin’s chief of privatisation, now one of the richest men in the world.

Boris Berezovsky, friend to Yeltin’s influential daughter. Made billions from the reforms

Roman Abramovich, another friend of the Yeltsin family. Now owner of Chelsea football club and worth more than 7 billion dollars.

Mikhail Fridman, Under Yeltsin, Fridman built Russia’s biggest bank Alphabank, He now has a personal wealth in excess of 15 billion dollars.

Petr Avon, Fridman’s business partner. Aven served in the Russian government during the initial reforms.

SOUNDBITE [English] Vladimir Mau, YegorGaidar’s Former Advisor: “Some people became very rich. Others less. But it normally happens. There are active people, less active people. For instance, I could have been much richer but I was more interested in other areas of activity.

- How?

Just thinking about business when I was in the centre of reforms. I was never interested in business.

- So if you were in the centre of reforms you could have got….

-Yes. Most of the oligarchs were not in the centre of reforms. Again it’s a myth. These were people who in the late Soviet Union were very much interested in getting rich. They started to buy some things and sell. Again, don’t believe in Propaganda.”

TIME CODE: 15:00_20:00

Narration: At Alpha Banks headquarters in Moscow, we had a meeting with one of Russia’s oligarchs. A bodyguard took us through the building to meet him.

Peter Aven. Head of Alpha Bank. He shared a desk with Yeltsin’s chief economist, Yegor Gaidar at university. When Gaidor gained power, he brought Aven with him. Making him a key player in the 1990 reforms. He is now fabulously rich.

SOUNDBITE [English] Petr Aven, Former President, Alfa Bank: “-You were involved with the government at the time as well?

Yes.

- Did you gain personally from the reforms?

Not at all. It was impossible even to imagine that someone in Gaidar’s cabinet could gain.

- The reforms themselves helped you make a lot of money

Yes. Because it made an environment that made it easy to make money.”

SOUNDBITE [English] Gregory Yavlinski, Founder, Yabloko: “When all of the reformers, became very rich. Very personally rich and the country became very poor this is a very specific reform. Full stop. That’s what I think. When the reformers became rich. And the people became poor for whom are they making this reform. What is the name of this procedure? Now I’m coming to you and saying, hey, I’m going to make a reform you. You say, Great, please do. I started the reform and came twice richer than before. Twenty times richer than before. And you became five times more poor than you were before. Do you like this reform? And what is the name of that reform?

- What do you call it?

I don’t know. In ever country you have your own name for it. In Russia we call it robbery.”

SOUNDBITE [Russian] Alexander Korzhakov, Boris Yeltsin’s former chief security officer: “A thieving, Oligarchy kind of capitalism. That’s what we got. I don’t like the word, “Oligarchy”. Because if you check its meaning, it’s about rich people doing something good for their country but our oligarchs just want everything for themselves.”

SOUNDBITE [English] Alexander Korzhakov, Boris Yeltsin’s Former Chief Security Officer: “Nobody except the oligarchs themselves can be happy about the rise of the oligarchs. And the oligarchs were not people who were real entrepreneurs. Even from a capitalist standpoint. They were not the people who were capable of organising enterprises. Who are capable of innovating. Organising efficient investment strategies and so on. However, they were the ones who were very successful in controlling huge Soviet structures and turning them into no less huge capitalist monopolies.”

Narration:Moscow, 1993. Anger at the reforms had reached boiling point. People took to the streets. And parliament tried to impeach Yeltsin. The army initially declared neutrality but suddenly came over to Yeltsin’s side. Tanks surrounded the Russian White House, where elected politicians were hold up. Outside, there were protestors supporting both sides.Sergey and his friends who were outside the White House that day, supporting the parliament.

SOUNDBITE [Russian] Sergey Kolotoryants, Activist: “There used to be a hole here, road works. It was dividing us and the Yeltsin supporters.

Where I was standing, there was a yellow armoured car with a speaker system. It was broadcasting propaganda. “Give up. You are standing here for nothing.”It was like the second world war.”

Narration: Dozens had been killed the day before, while trying to take over the television centre. Yeltsin controlled the media and was willing to kill to keep it. Now he had to take back the White House.

SOUNDBITE [Russian] Sergey Kolotoryants, Activist: “The first four tanks came from that corner, from the embankment side. They went through the gates and started to shoot. We were standing right here, in the square. We were stuck. Those who quickly threw themselves on the ground, were lucky.

I was told to run into the building where I would be given a gun. I ran there and asked where the guns were. And they said, “we don’t even have knives or forks here.””

Narration: Alexander Polyakov is a photographer. It was like no other in modern Russian history.

SOUNDBITE [Russian] Alexander Polyakov, Photographer: “I arrived here on the 1st October 1993 when there were already a lot of military tanks around. It was in the morning. And there were soldiers and the shooting was already going on. They were shooting into the parliament. And there were a lot of people standing on the bridge.”

TIME CODE: 20:00_25:00

SOUNDBITE [Russian] Alexander Polyakov, Photographer: “Also there were a lot of people on the embankment watching all of this, like a performance.

But it wasn’t a performance it was real killings of defenceless people who were based in the White House.

Most of the tanks were on the other side of the embankment next to Hotel Ukraine. As for the armoured cars, they were under the bridge. And the army with weapons, everywhere.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “Political violence happened exactly because there was a clear majority against reforms not just in the parliament but in the society. There was just no democratic way to go through with these policies without crushing the institutions that represented the popular majority.”

SOUNDBITE [Russian] Alexander Tarasov, Historian: “In the end of the day, Yeltsin had to shoot into parliament.

He did it because parliament was considered to be pro Yeltsin and the communists were in a minority. But all of a sudden, parliament rose up against Yeltsin. That was because it was a democratically elected parliament there without any fraud.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “It’s very clear that the government wanted violence because that was the way that they crash the resistance and it was a peaceful resistance, it was extremely successful and they didn’t know what to do about it ,so they used violence to stop it.”

SOUNDBITE [Russian] Sergey Kolotoryants, Activist: “Because otherwise we would never have left. It was the only way they could get the crowds to go.And they didn’t care about the victims because they were not people to them.”

SOUNDBITE [Russian] Alexander Polyakov, Photographer: “It was incredibly dangerous to be here. I saw a few people shot down right in front of my eyes. And I have to say that there were no shots were fired from the White House. They were killed from other directions.

Later, I heard that it was done by people who were specially trained to create such situations. I cannot say for sure, of course but I can tell you for sure that no one was killed from the White House side.”

SOUNDBITE [Russian] Sergey Kolotoryants, Activist: “Here, I saw sixty or seventy bodies and that was just the beginning.

Normally, when the army comes to a place where there could be shootings, they usually block the area and tell everyone to leave. But when they came in those days, they came and started to shoot immediately.”

Narration: Officially, 187 people were killed in the violence. Although the real figure is likely to be well over one thousand. Over twenty years on, shockingly, little research has been done to find the true number.

SOUNDBITE [Russian] Sergey Kolotoryants, Activist: After the clashes we couldn’t find half of the supporters who were standing here. They simply disappeared into nowhere. We even couldn’t find them in the piles of bodies.It was anti-constitutional, anti democratic, counter revolutionary. And the real bandits came to power.”

SOUNDBITE [Russian] Alexander Polyakov, Photographer: “Of course, those in power are to blame. There is no doubt, those in power are to blame. And finally, after twenty years, the current government agrees. Yes, it was a coup. Yes, it was an anti-state coup, performed by Yeltsin. Despite, those MPs of parliament who tried to protest.

What can a normal person feel when you see peaceful people getting shot? My first thought was that no one inside the building was going to stay alive.”

Narration: April, 1961. Yuri Gagarin becomes the first human being in space. It’s a triumph for the Soviet Union’s space industry, beating their American rivals. Russian’s remain deeply proud of this achievement. It’s a technological achievement difficult to imagine amongst the struggling Russian economy of today.And space wasn’t the only industry the Soviet Union were leaders in. During the Cold War, the superpower was second only the United States in the production of aircraft.

TIME CODE: 25:00_30:00

SOUNDBITE [Russian] Vladmir Lapshin, Former Aviation Engineer: “In the Soviet Union the aircraft technology was at a high level. The aircraft industry had its own metal producing factories, equipment, and its own means of production.100% of the aircrafts were made in the Soviet Union.”

Narration: During the 1980’s the Soviet Union accounted for 25% of the worlds civilian and 40% of the world’s military aircraft production.

SOUNDBITE [Russian] Vladmir Lapshin, Former Aviation Engineer: “When the reforms started, according to the new law for state factories, every aviation factory had to be established as a private company.

And it turned out that the expenses were covered by the state but the profits were retained by the private companies.

It also means that most of the profit were taken by the owners of the private companies.

So it turned out that the state factories were getting poor and the owners were getting richer.

Some of the factory were closed down. Such as….

The other factories struggled to survive. And it’s only recently that they have got better. But not all of them.”

Narration: Under Yeltsin, the aircraft industry was devastated, flooded with cheaper imports. In 1990, 715 civilian aircraft had been built. By 1998, 54 aircraft and by 2000 only 4 were built. A once proud industry and leader of the world, decimated. Hundreds of thousands of jobs were lost.

SOUNDBITE [Russian] Vladmir Lapshin, Former Aviation Engineer: “In the aviation industry, reforms were needed. But absolutely not the ones they got. As far as I understand, Gaidar’s reforms were dealing with a complex industry he didn’t understand. There was a complicated formula in the aviation, shipbuilding and other industries.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “All of a sudden you discover a very strange thing that for example, Russian dependence on oil actually increased, not decreased because of the reforms. Russian technological backwardness actually also increased, not decreased. So the gap between Russia and the West in terms of productive technologies, most advanced, high tech products, actually increased not decreased.”

SOUNDBITE [Russian] Vladmir Lapshin, Former Aviation Engineer: “It was considered that we don’t have to fight with anyone anymore so the military aircraft industry is no longer needed. And as for civil aircraft industry, that’s not needed either because we will buy Boeings and Airbus’ from abroad.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “So we lost or branches and industry and we lost whole branches of science and all sectors of the science and scholarship and that is something which is much harder to fix.”

SOUNDBITE [Russian] Alexander Korzhakov, Boris Yeltsin’s Former Chief Security Officer: “Privatisation was a robbery. The huge factories got sold for pennies. The industries were ruined. And the factories could only be bought by those who were appointed by Yeltsin’s friends and family.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “Enormous industrial capacity was lost. Which was very bad. But still the most serious and dangerous thing was that we lost a lot of people, of skills, of knowledge, of talent who left the country.”

SOUNDBITE [Russian] Alexander Tarasov, Historian: “We have to keep in my mind that as a result of the shocking reforms, the country lost around eleven million people. This is a huge amount. And it’s not because of war but during peaceful times. By contrast, we lost twelve million in Second World War.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “We are now far behind most of the Western world in many ways. The gap emerged and that is the most serious and most dangerous heritage of the 1990s.”

SOUNDBITE [Russian] Alexander Tarasov, Historian: “Under neoliberalism, Russia was turned into a resource colony for the West, into a country of the third world. Except a very large one. And that’s basically what happened. Before Parestroika, the Soviet Union was one of the great powers of the world.”

TIME CODE: 30:00_35:00

Narration: The Cold War had been running for over 40 years when Mikhail Gorbachev began his Glasnost or openness programme with the West. Meanwhile, the United States, under President Ronald Reagan was preparing for the collapse of the Soviet Union.

SOUNDBITE [English] Reagan, Former President of US: “As I see it, political leadership in a democracy requires seeing past the abstractions and embracing the vast diversity of humanity. And doing it with humility. Listening as best you can. Not just to those with high positions. But to the cacophony voices of ordinary people. And trusting those millions of people. Keeping out of their way. Not trying to act the all wise. The all powerful. Not letting governments act that way. And the word we have for this is freedom.”

Narration: To help or to benefit from the Soviet regimes transformation into a capitalist economy, the United States sent advisors to aid the Yeltsin government.

SOUNDBITE [Russian] Alexander Tarasov, Historian: “The consultants and advisors from the West arrived and they said that the only economic model in the world is neoliberalism. And Gaidor never even checked this information. And I have to say that Gaidor is not proficient in capitalism economy as he only ever studied communism. So he was just repeating Western advisors because he thought they were professionals.”

SOUNDBITE [Russian] Alexander Tarasov, Historian: “And Gaidor wasn’t the only one doing the thinking. For example, later, Putin mentioned that Chubais’s advisors were basically the official CIA agents of the United States. But it wasn’t his fault, says Putin. Because Chubais didn’t know they were CIA agents.”

SOUNDBITE [English] Gregory Yavlinski, Founder, Yabloko: “-Do you find it strange that Russian economist were being advised by Americans?

No It was not strange. The strange was that Russia did not want to have its own plan. Everyone can give the advice. But you must have your own plan and to debate it and try to convince to advisor that you are right and they are wrong. But they didn’t do that.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies:“The economic reforms in the Yeltsin period were extremely beneficial for the West. For the international corporations etc. The quality of resources that moved for the Soviet Union to the West was enormous.”

Narration: Billions of assets we transferred out of the country. And Western banks and money men benefitted through the buying of shares in the new companies.

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies:It was not just money that was siphoned out of the country. It was knowledge. It was technology. These were physical resources, including metal that was sold at very low prices. And Russia started losing technicians, specialist positions, all these people had to move to the West. And now you know in the United States, there are so called, Russian laboratories who were picked from Russian scientists in the 90’s.”

Narration: The IMF and World bank helped force Yeltsin’s hand through the threat of loans. The Soviet economy backed by the disaster of the initial Gaidar reforms was in such a dire state, the country needed cash. The IMF and World Bank were the only parties in a position to help.

SOUNDBITE [English] Gregory Yavlinski, Founder, Yabloko: “The advice of the American advisors was supported by the loans from the IMF so for Yeltsin to make choices, it was a difficult plan, between the real plan and the loans and he made his choice. Because he was afraid of the consequences”

TIME CODE: 35:00_40:00

Narration: 1996. Yeltsin is up for re election. The economy is still contracting and many workers haven’t been paid in months. His popularity is at an all time low. At the beginning of the campaign he is polling in 5th place, on only 8%. Leading and expected to win is the Communist, Gennady Zyuganov.

This would be a disaster for the oligarchs. So they got together and made sure one of their own, Anatoly Chubais was set up to run Yeltsin’s campaign.

The oligarchs raised huge sums of money, even more was made available by the West, in order to pay off disgruntled unpaid workers. A relentless propaganda campaign against Zyuganov was waged. In turn the Communist Party couldn’t compete financially.

On top of this Yeltsin’s health was poor, even suffering a heart attack during the campaign. This was kept secret from voters.

SOUNDBITE [Russian] Alexander Tarasov, Historian: “There were also other weird things. For example North Ossetia and Dagestan had 80% of votes for Zuganov. But in the second round, amazingly, 80% voted for Yeltsin. That can’t be true. It’s still hasn’t been revealed but without doubt there was fraud in those elections.”

Narration: In 2012, in a meeting with opposition figures, then President, Dmitry Medvedev reportedly said, “There is hardly any doubt who won that race. It was not Boris Nikolaevich Yeltsin.

SOUNDBITE [Russian] Alexander Korzhakov, Boris Yeltsin’s Former Chief Security Officer: “I worked for Yeltsin. I was faithful to him. Once we became blood brothers. Of course it wasn’t my idea. But Yeltsin suggested it. We should become blood brothers, while we were drunk.”

Narration: As Yeltsin’s bodyguard and confidante, few had a clearer window into the workings of power than Korzhakov. In his book he detailed how Yeltsin had little respect for democracy and at one point wanted to cancel the election all together. But an even more pressing matter for Korzhakov was Yeltsin’s health.

SOUNDBITE [Russian] Alexander Korzhakov, Boris Yeltsin’s Former Chief Security Officer: “Yelstin on his birthday, in 1996, when he turned 65, effectively quit his life as a President. When I met him in 1996, I couldn’t recognise him. He looked he got older in one night by twenty years. He probably self programmed himself to stop at 65 years old. He shouldn’t have gone on for a second term.”

Narration: In the power vacuum, says Korzhakov, the oligarchs, led by Anatoly Chubais, still one of the most hated men in Russia today, took advantage.

SOUNDBITE [Russian] Alexander Korzhakov, Boris Yeltsin’s Former Chief Security Officer: “During the first part of Yeltsin’s presidency, the oligarchs were scared of his power and security. But after 1996, when his security was destroyed, they started to control everything. And Yeltsin couldn’t resist. Yeltsin was nothing by that time.”

Narration: In one of Korzhakov’s most serious allegations, he has stated that he personally caught some of Chubais’s team effectively stealing money from state coffers, trying to take the money out of the Kremlin in a suitcase.

SOUNDBITE [Russian] Alexander Korzhakov, Boris Yeltsin’s Former Chief Security Officer: “Of course. Who else can be blamed? Who gave them power? As I said, it wasn’t Yeltsin who was ruling. It was Chubais and his team.”

Narration: Yeltsin had always had a reputation as a serious consumer of alcohol. But increasingly he became embarrassing not just to himself but to the entire Russian nation.

In his apartment on the outskirts of Moscow, we met Eugeny Ivanov. He used to work in a military equipment factory. But after Perestroika he set up his own construction business.

SOUNDBITE [Russian] Evgeny Ivanov, Businessman: “In those times, small groups of criminals appeared. Not the high level mafia but criminal gangsThey had weapons. And ran a protection rackets. They would come to each businessman, who were shared between the gangs. I knew I should stay away from them. I didn’t want to deal with them. But my business partner was in debt. So I had to talk with them about sorting out his debt .”

Narration: Just as corruption and criminality ran through the highest echelons of Russian elite in the 1990’s, so it did through the rest of society. As living standards dropped, law and order broke down. Crime rose 27%. Theft and burglary was common. And there was a rapid growth in violent crime, including homicides.

TIME CODE: 40:00_45:00

SOUNDBITE [Russian] Evgeny Ivanov, Businessman: “These criminal gangs appearing out of nowhere. And the situation became totally out of control. These gangs were trying to earn money. Those were the times.

There was no professional mafia. Professionals would work on the top level where the big business was going on. But on our level it was a mess: mass shootings, bandits. There were a lot of shootings because they weren’t experienced.”

Narration: The period also helped the internationalisation of the Russian Mafia, now one of the most powerful criminal groups in the world with reported operations in over fifty countries and with over 300 000 members.

SOUNDBITE [Russian] Evgeny Ivanov, Businessman: “The bandits I had to deal with, suddenly decided that my business was big enough and they wanted to take it. With the help of a middle man, my families safety was at hreatened. And once I heard this, I said, “I will give you everything. But just in case anything happens to my family, you will get a very strong response from me. Because I have still got money left to make problems for you.””

Narration: Eugeny tells us that the man the criminal gang put to head the company instead of him was his own friend and business partner.

SOUNDBITE [Russian] Evgeny Ivanov, Businessman: “Yes, it was him. After all this I even had to help him a few times to survive after he got thrown out of our business by the bandits later. I cannot call it betrayal. It was much worse. So thus he became the owner of my business. And later one of the bandits became the owner too.”

SOUNDBITE [English] Petr Aven, Former President of Alfa Bank: “It is a difficult feeling. You have a neighbour. He is like you. You have the same salary but after twenty years, he is a billionaire and you are not. That’s very serious feeling. You don’t like this guy. Because you are not prepared to blame yourself. You blame him. Because he made money. And that’s very natural.

- So you think that a lot of people dislike the oligarchs out of jealousy?

-Yes?”

SOUNDBITE [Russian] Oleg Gulubev, Businessman: “In my opinion they are all bastards. I understand when people start their own business, work hard and get profits, like a friend of mine who is a farmer. He works very hard. But when you just got the share of state property. And then you resell it and then resell it for money abroad and that’s how you become rich….”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies:You never say it was a missed opportunity because somebody used this opportunity incredibly. The oligarchs, the bureaucracy, some of the intellectual elite, for them it was a tremendous opportunity that they did benefit from. For the majority of the country it was a disaster.”

SOUNDBITE [English] Petr Aven, Former President of Alfa Bank: “- Couldn’t you have done it in a better way?

-Everything could be done in a better way basically. But again, Russia, is not the Czech Republic.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies:If you are looking at some Eastern European countries, of course, there are different scenarios in different countries, all of them more or less moved towards capitalism but at the same time most of them managed to avoid that that kind of terrible collapse of living standards, like Slovenia did for example, the Czech Republic did. They really managed to find ways which were not so destructive in social terms.”

Narration: The Czech Republic, formerly part of the Soviet Block unlike the Russian government, successfully managed to include its own citizens in the privatisation process by the distribution of vouchers. These vouchers allowed Czech’s to buy shares in the new companies leading to a fairer distribution of wealth. A wealth that on the whole, the Russian people missed out on.

SOUNDBITE [English] Vladimir Mau, YegorGaidar’s Former Advisor: “- Is there anything that you did wrong?

Many things could have been done better. But frankly I don’t what could have been done better. I do know things could go much worse.”

TIME CODE: 45:00_51:00

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies:There is a standard response that all politicians like to use. If we didn’t do that, it would have been even worse. First of all, its hypothetical statement. It could have been worse but maybe it could have been better. There is no proof, no evidence you can give.”

Narration: Back at the Boris Yeltsin Museum, a campaign is now under way, to reinvent Russian history. An attempt to convince a new generation that Yeltsin was one of the great Russian leaders.

SOUNDBITE [English] Dmitry Pushmin, Guide, Boris Yeltsin Presidential Centre: “They are donors. There are more than sixty countries and Russian companies that were involved in building this Presidential centre. And the museum. We are grateful for all of them.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies:If you’re taking the museum of Yeltsin, and this whole propaganda around it, it only shows how disconnected today’s Russian elite is from the population. Because, yes, the elite now it is not shy to say openly that they benefitted from Yeltsin.”

SOUNDBITE [English] Petr Aven, Former President of Alfa Bank: “- A lot of people in Russia say they don’t like Yeltin. You’ve said he is a great man. Why do you think there is a disparity between you think he is a great man and the majority of Russians think he isn’t well, first of all,

-I have an economic education so maybe I am more objective that these people.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies:Presenting Yeltsin as a great man is also a part of a neoliberal segment and lead to encourage themselves to repeat what has already been done. To do it for a second time. You have to follow somebody’s path. And Yeltsin is a good example of that.”

Narration: This is Anatoliy Kirillov. One of the men responsible for raising the funds for the museum. He took us on a drive around Yekateringburg, Yeltin’s home city.

SOUNDBITE [Russian] Anatoliy Kirillov, Fund Manager: “Because he led the country in a peaceful way, not the way of violence. He led the country when it needed changes. A new leader was needed and he became such a leader who fulfilled the will of the people

Can you stop near the monument? Turn around! No. No. Stop here. It’s a very important place!

Boris Yeltsin came here in his election campaign in 1996. And I had a meeting with him here. This place has meaning for me. Not only because of the Zukov Monument but because Yeltsin came to his home city to get support and meet people. The people of the Urals, of course, were supporting him and we are still doing it, educating people about Yeltsin.

I was beginning to think that he didn’t want to answer my question…”

Narration: Like in the Museum, criticism of Yeltsin seemed to be unspeakable during our tour.

SOUNDBITE [Russian] Oleg Gulubev, Businessman: “I think if there was ten or fifteen years more of Yeltsin’s power, I cannot even imagine where the country would go. He was totally unpredictable. He had his own very strange ideas about the development of this country. And the people around him were not good.”

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “Absolutely right , this is one of the problems of todays Russia, the people don’t want to understand the day simply created post –soviet criminals system in a direct and very wide, and it’s what they did.”

SOUNDBITE [Russian] Gregory Yavlinski, Founder of Yabloko: “I’m quitting. I’ve done everything I could. The new generation will replace me, those who can do more and better.”

Narration: Enter Russia’s second and current President, Vladimir Putin, formerly a KGB agent. He entered politics, rising quickly in Yeltsin’s administration. In December 1999, as Yeltsin stood down, he appointed Putin as Acting President.

SOUNDBITE [English] Boris Kargarlitski, Institute of Globalisation Studies: “Well, Putin on the one hand, is a continuation of Yeltsin. On the other hand, definitely. Putin’s policy was to try to correct the excesses of the 90’s. And that was seen by the people as a very necessary and important thing to do.”

Narration: Six months into his leadership, he won his first election and currently remains, in 2016, deeply popular with the majority of Russian people. This can largely be explained in relation to the years that preceded him and in his differences to Yeltsin. Seen as a strong and sober leader, who in part took on the power of the hated oligarchs, Putin is seen to have given Russians pride again in their country, after the embarrassments of the Yeltsin years. He has also been helped by a stabilizing economy and historically high oil prices.

The story of Russia in the 1990’s has often been overlooked by history. Far less interesting than times of war or revolution. It should not be. As it is a not only the story of the creation of modern Russia. But also, a warning to countries who plan great economic changes in the future. A warning that reforms, done badly can have disastrous consequences.

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