After the fall....pg 223
To provide idealogical and technical backup for Yeltsin's Chicago Boys, the US government funded its own transition experts whose jobs ranged from writing privatization decrees, to launching a New York-style stock exchange, to designing a Russian mutual fund market. In the fall of 1992, US-AID awarded a $2.1 million contract to the Harvard Institute for International Development, which sent teams of young lawyers and economists to shadow the Gaidar team. In may 1995, Harvard named Sachs director of the Harvard Institute for International Development, which meant that he played two roles in Russia's reform period: he began as a freelance writer for Yeltsin, then moved on to overseeing harvard's large Russia outpost, funded by the US government.
Once again a group of self-described revolutionaries huddled in secret to write a radical economic program. As Dimitry Vasiliev, one of the key reformers, recalled, "At the start, we didn't have a single employee, not even a secretary. We didn't have any equipment, not even a fax machine. And in those conditions, in just a month and a half, we had to write a comprehensive privatization program, we had to write twenty normative laws... It was really a romantic period."
On October 28, 1991, Yeltsin announced the lifting of price controls, predicting that "the liberalization of prices will put everything in its right place." The "reformers" waited only one week after Gorbachev resigned to launch their economic shock therapy program-the second of the three traumatic shocks. The shock therapy program also included free-trade policies and the first phase of the rapid-fire privatization of the country's approximately 225,000 state-owned companies.
In March 1993 the Russian Parliament voted to repeal the special powers they had given Yeltsin. Yeltsin declare a "state of emergency" and three days later the Russian Supreme Court backed up the Parliament!
But.. pg 225 +226
Nevertheless, the west threw its weight behind Yeltsin, who was still cast in the role of a progressive "genuinely committed to freedom and democracy, genuinely committed to reform," in the words of then US President Bill Clinton. The majority of the Western press also sided with yeltsin against the entire parliament, whose members were dismissed as "communist hard-liners" trying to roll back reforms. They suffered, according to the New York Times Moscow bureau chief, from "a Soviet mentality- suspicious of reform, ignorant of democracy, distainful of intellectuals or democrats."
The IMF threatens to rescind a $1.5 billion loan then...pg 227
Some kind of armed conflict between Yeltsin and the parliament was now evitable. Despite the fact that Russia's constitutional court once again ruled Yeltsin's behavior unconstitutional, Clinton continued to back him and Congress voted to give Yeltsin $2.5 billion in aid. Emboldened, Yeltsin sent in troops to surround the parliament and got the city to cut off power, heat and phone lines to the parliament building. Boris Kagarlitsky, director of the Institute of Globalization studies in Moscow, told me that supporters of Russian democracy "were coming in by the thousands trying to break the blockade. There were two weeks of peaceful demostrations confronting the troops and police forces, which led to a partial unblocking of the parliament building, with people able to bring food and water inside. Peaceful resistance was growing more popular and gaining broader support every day."
Yeltsin attacks the parliament.. pg 228
A clear signal from Washington or the EU could have forced Yeltsin to engage in serious negotiations with the parliamentarians, but he received only incouragement. Finally, on the morning of October 4, 1993, Yeltsin fullfilled his long-prescribed destiny and became Russia's very own Pinochet, unleashing a series of violent events with unmistakable echoes of the coup in Chile exactly twenty years earlier. In what was the third traumatic shock inflicted by Yeltsin on the Russian people, he ordered a reluctant army to storm the Russian Whitehouse, setting it on fire and leaving charred the very building he had built his reputation defending just two years earlier. Communism may have collasped without thr firing of a shot, but Chicago-style capitalism, it turned out, required a great deal of gunfire to defend itself: Yeltsin called in five thousand soldiers, dozens of tanks and armored personel carriers, helicopters and eleite shock troops armed with automatic machine guns-all to defend Russia's new capitalist economy from the grave threat of democracy.
pg 239
Rereading Western news reports on Russia's shock therapy period, it's striking how closely discussions at the time paralleled debates about Iraq that would unfold more than a decade later. For both Clinton and the Bush Sr. adminastrations, not to mention the European Union, the G7 and the IMF, the clear goal in Russia was to erase the preexisting state and create the conditions for a capitalist feeding frenzy, which in turn would kick-start a booming free-market democracy-managed by over-confident Americans barely out of school. In other words, it was Iraq without the explosives.
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