My response to this warning shot took the form of a statement from the Press Service of the Gorbachev Foundation:
M. S. Gorbachev has in recent weeks repeatedly drawn the attention of those he has spoken to, including those abroad, to the extreme importance of stabilizing Russia and ensuring the success of the reforms. He has emphasized that, in the face of serious difficulties, we must remain firm. He has, in the process, noted that his proposals ‘come from someone with a strong interest in seeing that everything that has been initiated should be carried through to completion, and that Boris Yeltsin and the government should succeed.’ M. S. Gorbachev considers the tone of the statement issued by the press secretary of the president of the Russian Federation unacceptable. He expresses his conviction of the need for the further consolidation of Russian society and strengthening of the forces of reform.
Yeltsin’s team was meanwhile busily preparing for a trial in the Constitutional Court. Representation of the president’s interests was delegated to officials close to Yeltsin, under Secretary of State Burbulis. On the day before the trial, he publicly expressed his confidence that the court would arrive at a verdict ‘conducive to continuation of reform by Boris Yeltsin’s team’ and would uphold the constitutional ban on the CPSU, and that this would ‘prove the path to normal state governance in the Russian Federation’.
With the beginning of the politically motivated Trial of the Communist Party, I found myself again under fire from two directions. More precisely, I was under a synchronous political and propaganda attack from all directions by radicals of the left and right. Den’, the mouthpiece of sundry anti-reform forces, demanded that Gorbachev should be put in the dock for having instigated the State Emergency Committee coup, while simultaneously demanding that all the coup participants should be released.
Yeltsin’s side were threatening to ‘take measures’, to discredit me, and intriguing to force me to leave the country. Both sides were eager to take it out on Gorbachev in order to divert public attention from their own very serious failures and the consequences of their policies.
On 29 July, literally the day after I announced my decision on moral grounds to have no truck with the trial at the Constitutional Court, the Finance Ministry of the Russian Federation, through its Audit Department, set up a special commission to scrutinize the economic and financial activities of the Gorbachev Foundation.
The Commission, which comprised no fewer than 10 experienced auditors under the direction of the Chief Audit Inspector of the Finance Ministry, began a total audit of the Foundation’s financial records. And all this within five months of the Foundation’s official opening and almost six months before the accounts for the fiscal year were due! It was obvious that such an extraordinary inspection could only have been initiated by the man at the top. That fact, against a background of major economic and financial upheaval, the embezzlement of billions of roubles of public money and property, bureaucratic malfeasance and rampant corruption in every sector of the economy and government of the country, speaks volumes about the character and the moral and intellectual level of the Russian government of the time.
Unfortunately, the same sort of thing goes on in front of our eyes even today.
First results of shock therapy
Summer was coming to an end, but this year August at least brought no catastrophic events, other than that the economic situation was approaching crisis levels. The decline of industrial output continued, due mainly to the policy of shock therapy and the rupturing of economic ties between the republics of the former Soviet Union. Reminiscing about that period, Boris Yeltsin wrote later: ‘In September 1992, I looked at the statistics for the economy over the first nine months. They were horrifying.’ In the same place he comments:
By the end of summer, it was clear the economy was breaking down… The danger finally became clear that the period of galloping inflation could drag on for years… Whole strata of the population were sliding towards the poverty threshold… And at the same time there was acute social stratification. The wealth of some was in stark contrast with the poverty of others. Society was entering a difficult period of social alienation.
I could not put it better myself. The only plus was ‘elimination of shortages of goods’. What a price that came at! By the end of the year, prices had risen 2,600 per cent and inflation was running at 5–7 per cent a week. The savings of those who in the Soviet period might have been categorized as middle class had been rendered worthless. Instant liberalization of prices and hyperinflation had effectively expropriated the population’s savings to the tune of some 800 trillion roubles, or $160–170 billion. In 1992, Gross Domestic Product fell by almost 20 per cent and industrial production by 18 per cent.
The government was now pinning its hopes on swift privatization of state property. Behind closed doors, a voucher privatization scheme was hastily drafted over the summer. It differed substantially from the ‘popular privatization’ plans being worked on by academics in the Supreme Soviet, the Moscow Mayor’s Office and other institutions. Once again, the policy was to rush it through without consultation. On 23 August, the president signed a decree introducing voucher privatization on 1 October, with the intention that it should come into force within a week, before the Supreme Soviet deputies returned from their summer break. This was a straightforward violation of the constitution, under which privatization of state property fell within the competence of the Congress of People’s Deputies and the Supreme Soviet.
A year after the coup
On 17 August 1992, I arranged a press conference for the numerous journalists who had asked for interviews in connection with the first anniversary of the August coup. Today, when many years have passed, I reflect on how many of these anniversaries there have been, and how every time they provide an excuse for unfounded conjecture, defamation and libel. In 1992 that was just beginning. The coup plotters, newly repentant, began one after the other to offer up new accounts of the events with the manifest purpose of whitewashing themselves and discrediting Gorbachev. Meanwhile, the consequences of their mischief-making were becoming only too evident, and that was the main point I made at the news conference.
The State Emergency Committee coup, I said, was a criminal escapade rejected by the citizens of Moscow and the country at large, but which, ultimately, played into the hands of those opposed to maintaining a single unified state. I included among those complicit in destruction of the Soviet Union the government of Russia proper, which, in December 1991, torpedoed the possibility of concluding a new Union Treaty of the sovereign states that had comprised the USSR.
In reply to a question about the possibility of another coup, I said, ‘Only a crazy idiot would embark on such a course’, but I warned that the growing levels of mass discontent had the potential to generate forces far from democratic. ‘I think,’ I said, ‘that the present government is at risk of losing out in exactly the same way Gorbachev lost out: by falling behind on key political issues.’
I also said I was shocked by the levels of corruption in the current state institutions, to which we had entrusted the reforms and our own destiny. ‘It has come to such a state of affairs that a guidebook has been published in America listing the names of officials in our new government and other institutions and specifying the number of dollars they require as bribes for resolving issues.’
Under the guise of ‘popular privatization’, there are plans to rob the population. Everybody will be given a voucher equivalent to a month or a half-month’s salary, and those who have been stealing and looting the economy will buy up the securities from the people and seize, first, economic and then political power.