Down with Big Brother (59 page)

When the Soviet parliament debated the events in Lithuania the following day, Gorbachev was unrepentant. He insisted he had known nothing about the violence until it was over, “when they woke me up.” But he refused to criticize the army’s decision to provide military assistance to the self-appointed National Salvation Committee, whose members did not even have the courage to identify themselves. Indeed he put the blame for what had happened on Landsbergis and other Lithuanian leaders, accusing them of “violating” the Soviet Constitution.

“I don’t see how we will make progress with such people in charge,” he told the deputies. “Lithuania has treated us like a foreign country.”
³⁴

There were only two possible explanations for the line that Gorbachev was taking, and both were equally disturbing. Either the commander in chief was in control of his own security forces, or he wasn’t. In the first case he was the accomplice of hard-liners, who were attempting to mount a coup against a democratically elected parliament. In the second case he had become their puppet. By refusing to discipline his subordinates, he had effectively condoned a flagrantly illegal act. His failure to condemn the violence was an implicit invitation to the would-be putschists to try again.

Documents unearthed following the failed coup of August 1991 demolish the cover story about the commander of the Vilnius military garrison’s responding to an “appeal” from the National Salvation Committee. The decision to use force was made not in Vilnius but in Moscow, where Soviet military leaders had been preparing for such a confrontation over many months. A few semiliterate handwritten jottings discovered in the diary of Defense Minister Dmitri Yazov and dated March 22, 1990—less than two weeks after Lithuania had declared its independence—provided an insight into what was being planned:

• Issue a warning. Not recognize their laws! Bring pressure to bear.
  
• If necessary, act resolutely!
  
• What are we to draw on? The old government cannot be resuscitated.
  
• To draw on the committee and set up committees everywhere!
  
• To be ready to take the TV center?!
  ³⁵
  

A subsequent diary entry, for April 9, 1990, shows that Soviet leaders were considering the imposition of direct presidential rule on Lithuania at that time. But Gorbachev opposed the use of force, partly for fear of offending international public opinion. “We cannot take the strap to Lithuania’s
‘behind,’ ” Yazov quoted him as saying. “The issue of Lithuania far transcends the framework of the Union! Is the Lithuanian issue becoming a world-international issue?”

It turned out that the puppeteers in Moscow had planned everything in advance, including a “general strike” by ethnic Russians and an attempt to storm the parliament building:

• General strike! A telegram will be sent for them to abolish their resolutions, restore the constitution.
  
• About 200 armed men, in the Hall and the Supreme Council.
  
• An appeal will be made.
  
• The publishing house belongs to the CPSU (Soviet Communist Party)—capture it!
  

On the Saturday that the KGB dispatched the Alpha Group to capture the television center, Kryuchkov drove to the Kremlin for a secret meeting with his fellow plotters. According to Kremlin records, the session began at 7:15 p.m. and broke up at 2:10 a.m., shortly after the shooting had begun in Vilnius.
³⁶

What is most intriguing about this meeting, which took place in the office of Gorbachev’s chief of staff, Valery Boldin, was the list of participants. In addition to Kryuchkov and Boldin, it included Valentin Pavlov, who was about to become Soviet prime minister, Oleg Baklanov, the head of the military-industrial complex, and Oleg Shenin, a Communist Party secretary in charge of organizational matters. These men were to become the key figures in the State Committee for the State of Emergency, which seized power from Gorbachev eight months later.

T
HE REMAINING LIBERALS
in Gorbachev’s entourage were sickened by the use of military force in Lithuania and the president’s refusal to condemn it. They recalled Shevardnadze’s warnings of “an approaching dictatorship.” Now each of them faced a crisis of conscience. They could do the honorable thing and resign, leaving Gorbachev in the clutches of the hard-liners. Or they could stick with him in the hope that he would have a change of heart.

The president’s economics adviser, Nikolai Petrakov, chose to resign, after signing a collective protest letter to the
Moscow News
accusing a “regime in its death throes” of launching an “open war” on the republics.
³⁷
The foreign policy adviser, Anatoly Chernyayev, dashed off a long memo to
Gorbachev, describing his sense of “torment” and “shame,” but never submitted it.
³⁸
Several other staffers, including the presidential press spokesman, Vitaly Ignatenko, were talked out of resigning by Yakovlev, who insisted that this was not the time to abandon the president. Meeting in Yakovlev’s office on Monday afternoon, the dissenters decided on a different course of action: They would persuade Gorbachev to fly to Vilnius and “bow before the dead.”

Yakovlev went to see Gorbachev, who agreed with the plan. He instructed his staff to draft a speech that he could deliver to the Lithuanian parliament. By Tuesday, however, the president had once again changed his mind. “Some comrades are against the idea,” he told his aides, evidently referring to Kryuchkov. “They say it is impossible to guarantee the security of the president.”
³⁹

Although Gorbachev refused to apologize for the use of force in Lithuania, he did put a brake on the machinery of repression. If everything had gone the way the hard-liners planned, presidential rule would have been declared in all three Baltic republics, and parliamentary activity suspended. The bloodshed in Vilnius, combined with the spectacle of tens of thousands of unarmed civilians taking to the streets to defend their parliaments and the outrage of the Russian intelligentsia, caused Gorbachev to reconsider his position. He would not permit his hard-line associates to push events to their logical conclusion.

The men who had gathered in Boldin’s office in the Kremlin drew their own conclusions from Gorbachev’s hesitation and prevarication. There was no point in restoring “socialist order” on the periphery of the empire if the center could not be relied upon. The script was fine, but it was necessary to make a few alterations. Next time they would begin at the center and proceed from there to the republics.

MOSCOW
April 5, 1991

A
S WINTER GAVE WAY
to spring, the shock of the attempted coup in Lithuania began to fade. Ordinary Soviet citizens had other, more pressing matters on their minds, including the problem of finding enough to eat. The economy was in free fall. Shortages were spreading from one sector of industry and agriculture to another, creating a devastating ripple effect. In the past Soviet leaders might have been able to make up for the fall in production by increasing imports of grain and industrial goods. But the country’s foreign exchange reserves were practically exhausted. In the words of a government report, the world’s first socialist state was “on the verge of bankruptcy.”
⁴⁰

The real mystery about the Soviet Union’s command economy is not that it collapsed when it did but that it managed to survive for so long. Economic power was concentrated in the hands of a small group of bureaucrats at the top of the pyramid. Even if these apparatchiks had been totally omniscient and supremely intelligent, it would still have been physically impossible for them to match the collective wisdom of the millions of individuals who form a Western-style “marketplace.” The Stalinist system of central planning could cope with grandiose tasks, like building nuclear bombs and producing thousands of tanks, because it was good at mobilizing resources to achieve a specific goal. The more complex the economy became, the more
inefficient the system proved to be. The command economy lacked the myriad self-correcting mechanisms of a market economy. When a capitalist entrepreneur makes a wrong decision, he is quickly put right by millions of consumers; a similar error by a Soviet bureaucrat could go undetected for years, with horrendous consequences.

In the end there was only one self-correcting mechanism that mattered in a totalitarian state as powerful and self-sufficient as the Soviet Union: the country’s ability to support such a profligate and hopelessly inefficient system. Because Russia was a land of fabulous natural wealth, it took some time before this mechanism kicked into operation. As long as Kremlin leaders could export enough oil and natural gas to ensure Soviet citizens a basic standard of living and bankroll military adventures in the Third World, they had little incentive even to think about reform. It was no coincidence that Mikhail Gorbachev came to power just as the petrodollars were beginning to run out.

Even with a committed reformer occupying the post of general secretary, the system proved very resistant to change. Prior to 1991 there were hidden reserves that could be tapped to extend the life of the command economy by a few more months. When oil exports started to decline, there were still plentiful deposits of natural gas. When the gas industry began experiencing difficulties, the planners switched their attention to timber and precious metals. When all else failed, the Kremlin could always borrow money on international markets. The Soviet Union’s credit rating remained relatively high until 1990.

By 1991 it was no longer possible to disguise the gravity of the economic crisis. Oil exports had slumped by 50 percent since 1989 because of a decline in domestic production. After climbing slowly during the seventies and early eighties, the Soviet Union’s hard-currency debt had more than doubled under Gorbachev to $68 billion.
⁴¹
Western bankers were reluctant to lend Moscow any more money, without firm guarantees of repayment. In a sign of financial desperation, Kremlin leaders now began authorizing massive sales of gold bullion to shore up the collapsing balance of payments. When the figures were published later that year, Western bankers were shocked to discover that the Soviet Union’s gold reserves had shrunk to 240 million metric tons, worth about $3 billion, a fraction of earlier estimates.
⁴²

The myth of Soviet financial respectability had been shattered for good.

J
UST BECAUSE THE ECONOMY WAS
a shambles and ordinary Soviets had extraordinary difficulty making ends meet did not mean that it was impossible
for enterprising, well-connected individuals to make a lot of money. In fact, the opposite was true. The greater the economic chaos and confusion, the greater the opportunities for personal enrichment. In a country that was increasingly out of touch with economic reality, someone with a firm grasp of the laws of supply and demand could become a millionaire overnight.

The simplest way of making a fortune was to find a way of purchasing goods and raw materials at artificially low Soviet prices and turn around and sell the same goods for much higher free market prices. The profit margin was often staggering. This was the trail blazed by the country’s first millionaire, Artyom Tarasov, one subsequently followed by the vast majority of successful Soviet businessmen. Tarasov, an engineer working for the Moscow City Council, devised a method for turning Soviet junk into American dollars. He scoured Russia for scrap metal, which he purchased with rubles at dirt-cheap prices. He exported the metal to Western countries and used the proceeds to purchase personal computers, which he was able to resell in Russia for a huge profit. Business soared.

By the end of 1990 Tarasov had moved on to the even more lucrative oil trade. He persuaded the newly appointed Russian government to grant his company, Istok, a license for the export of several million barrels of Russian oil. He was able to purchase the oil for the ruble equivalent to eighty-five cents a barrel and sell it abroad for around twenty dollars a barrel in hard currency. These transactions yielded millions of dollars in profits. Under the terms of Tarasov’s agreement with the Russian authorities, Istok was permitted to keep the funds in a French bank account. There was one, very important caveat, however. The entire hard-currency proceeds of the sale would be used to purchase consumer goods that had already been promised to Russian farmers, under an incentive scheme known as Harvest ’90.
⁴³

At the beginning of April 1991 came news that Tarasov and his principal business partner had fled the country. The money earmarked for Harvest ’90 had vanished from the French bank account. The Russian farmers had lost out once again. According to Russian investigators, the only benefit the farmers ever derived from an import-export deal designed to offer them new hope was several thousand pairs of defective rubber boots. The state prosecutor’s office accused Tarasov of “misappropriation” and “breach of trust,” but failed to bring formal charges because of the statute of limitations.
⁴⁴
Tarasov maintained his innocence all along and refused to cooperate with the investigation, saying that it was inspired by his political enemies.

Hundreds of similar get-rich schemes were implemented in the early
months of 1991. A subsequent parliamentary investigation showed that only a small proportion of the several billion dollars earned by semiprivate companies like Istok during 1990–91 ever returned to Russia.
⁴⁵
These were halcyon days for the emerging class of nomenklatura capitalists.