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Russia in the Next Millennium

Russia in the Next Millennium
John C. Gannon Chairman,
National Intelligence Council
DFI International & Henry L Stimson Group

December 9, 1999

It is a special pleasure to speak today at DFI International and the Henry L. Stimson Center, which, if my math is right, were founded by Barry Blechman 15 and 10 years ago, respectively. I understand you are celebrating your anniversaries tomorrow night with a big party! Congratulations! Barry is well-known and respected in the Intelligence Community, most recently for his active membership on the President’s Commission on the Ballistic Missile Threat, chaired by Don Rumsfeld. As an analyst, I can tell you the Commission’s report was rigorous and continues to have significant impact.

Talking coherently about Russia these days is a tough business, and I do so today with some trepidation. So let me seek refuge in the sterling reputation of Henry L. Stimson, your patron diplomat and one of the great American statesman of the twentieth century. He was a man who appreciated clarity of vision. My guess, however, is that Secretary Stimson would be just as perplexed and frustrated as we are in trying to assess where Russia is headed today.

Today, I will make some general marks about the current situation in Russia, then focus on the coming Duma and Presidential elections, then make a few points about Chechnya and China, and, finally close with a few comments on Russian views of arms control. I regret at this festive time of the year that my remarks largely suggest disappointment, missed opportunities, "palace intrigue," and systematic corruption.

It reminds me of an old Russian joke that goes like this: What is the difference between a Russian optimist and a Russian pessimist. The pessimist says, "Things cannot possibly get any worse." The optimist, on the other hand, says, "Oh, yes they can!"

Finally, I’ll turn to you for comments and questions about Russia or anything else you want to talk about. The back-and-forth is the real value added for you all and for me.

Russia, with its thousands of nuclear weapons, is experiencing a triple revolution of unprecedented magnitude:


First, it is in the midst of a major political transformation—that is, moving from a communist dictatorship to an as yet uncertain new system, which could be a renewed authoritarism to something more closely resembling democracy.

Second, Russia is undergoing significant economic change.

  • As you know, the USSR was once the world’s biggest "command economy"—one in which political commissars in Moscow determined all aspects of civilian/military production--from the number of shoes to be produced, to the location of cigarette factories…
  • Today, Russia has elements of a market system, particularly in the consumer goods sphere, though a bit chaotic, with an economy still heavily manipulated by governments at all levels.

Third, Russia is still searching for a post-Soviet identity. This is hard to quantify or even describe, but suffice it to say that many Russians today wonder exactly what it means to be a Russian as the new millennium dawns.

  • There are some 25 million ethnic Russians who live in neighboring former Soviet republics, like Ukraine, Kazakstan, and the Baltics. Only a small number have emigrated to Russia; most prefer to remain where they are though they are no longer the dominant group.
  • Many Russians have yet to accept the reality of independence for these states.
  • Similarly, Russians are still coming to grips with the loss of their superpower status in the world. Once they played a role in many international issues—today they have very little influence.

These challenges will face Russian leaders for the foreseeable future, and it will be an uphill struggle to achieve political consensus on fundamental economic policies.

  • The Communist/Nationalist-dominated Duma has one vision of Russia’s future (heavily statist) while the veneer-deep government elite under Yel’tsin has sought, though episodically, to build a market economy. That is, the Yel’tsin government has talked about commitment to market, but by its actions, e.g., granting and withdrawing of favors, has impeded, though not stopped, its development.

Not surprisingly, therefore, Russia is neither a command economy, nor a market economy. It lacks the legal or regulatory infrastructure critical to a smooth, open market. This is a legacy of the Soviet period. Because all private market activity was illegal, no body of law or jurisprudence was in place after the breakup of the Soviet Union.

  • The direction toward a market economy was set by the Gaidar government in the first year of Russia’s existence as an independent state. But the process proved even harder in Russia than in other former Communist states, partly because of the lack of political consensus, the heavily militarized economy, and the lack of leadership by Yel’tsin. As a result, the process slowed and the institutions needed to support the market remain embryonic.

What has been the result of this continuing anarchy and absence of political consensus?

  • First, a weak legal framework with poorly defined or non-existent property rights.
  • Second, a continuing "second economy"--that is, barter trade, an exchange of services that range from 40-65% of economic activity, depending on whose estimates you use. This second economy, of course, generates no tax revenue.
  • Third, increased growth and power of organized crime; government corruption; and a woefully inefficient economy.

We now see a culture of "economic desperation" taking root across all sectors of society, forming an economic "Gordian Knot."

  • As the economic crisis worsens, the potential for corruption grows. Everyone--from government officials down to street cops--understandably looks for ways to ensure their future.

To build a rule-of-law society that brings the economy "above ground"—and generates critical tax revenue—as well as to offer broader opportunity for all Russians, such corruption will have to be significantly curtailed--but who will be able to do this? And how? It is hard to believe from today’s perspective, that the Duma will take on this challenge anytime soon.

The coming Russian Duma election on 19 December should be seen as a runup to the presidential election next June – when Yelt’sin’ successor will be chosen.

The one positive feature of this month’s election is that it is taking place at all and that such votes are regarded as a normal part of the political process.

  • Russian elections are relatively free—outright fraud occurs only at the margins.

  • Still, the Kremlin uses all its levers to turn the pre-election environment in its favor (media, pressure on governors).

  • The Kremlin still controls two TV channels and is using them to spew venom on its opponents to drive them out of the race.

  • The main target is Primakov, whom the Kremlin fears is a truly independent candidate in the presidential race. The Kremlin is counting on the Communist party, and a broader group of dirty tricksters,
  • The December Duma election and June presidential election are, as I have suggested, two phases of one process.
  • The small circle around Yel’tsin is playing a critical role.

-- Dubbed "the family," the group includes: Yel’tsin’s daughter Tatyana; Chief of Presidential Administration Alexander Voloshin; Yel’tsin ghost writer Valentin Yumahsev; new millionaire Roman Abramovich; well known tycoon Boris Berezovskiy; and Deputy Chief of Presidential Administration Igor Shabdurasulov.

-- The group wants to control the presidential election, to maintain their own power and to stay out of jail no matter who wins.

-- The group supported Vladimir Putin as heir apparent, but now may be leery of his strong political position (conduct of war in Chechyna).

-- Meanwhile, Putin remains Y’eltsin’s choice for a replacement–and his rise in opinion polls continues.

-- Putin’s rise shows the Russian people’s desire for a strong hand at the top who will give the state a stronger role in running the economy and be more assertive in foreign and security policy.

There has been no real development of a party system in Russia this decade - thanks in part to Kremlin efforts but also to the amorphous nature of Russian society.

  • Thirty parties are vying for the Duma but only a half dozen or so have a realistic chance of getting past the 5% barrier.
  • As in 1993, there are really only 1 ½ parties in Russia today: the communist party – whose electorate is shrinking, and the liberal, intellectually-minded Yabloko, led by Grigoriy Yavlinski, which generally garners 10-15% of the vote.
  • The two major personalist parties of the hour are Primakov’s "Fatherland All Russia" – which he formed with Moscow Mayor Luzhkov and some other governors, and a party cobbled together at the last hour by the Kremlin around Minister of Emergencies Shoygu, labeled "The Bear" ("Medved" in Russian, in an obvious appeal to popularity).
  • Half of the 450 seats at stake in the Duma election will be won by those candidates who receive a majority vote (similar to US system)
  • Other half by proportional representation of parties that get a minimum of 5% of the overall vote.
  • As of now, four parties seem set to make it past the 5% barrier: the Communists, Grigoriy Yavlinski’s Yabloko, Primakov’s Fatherland All Russia, and "the Bear," or Medved led by Shoygu.
  • Just as in 1995, the Communists will get the largest share of the vote, probably around 20%.
  • Barring surprises or an annulment, the new Duma will be more centrist in orientation, but it will be the centrism of vague platforms and not of ideas.
  • Another one of its characteristics will be the atomized nature of the parties.
  • In Russia "the party of power," those who hold high office, have some levers to create coalitions that fade immediately after the election, or fall apart as their leaders lose clout.

-- Former Prime Minister Chernomyrdin, for example, pressured governors to cobble together the "Our Home is Russia" party. That party is unlikely to get past the 5% barrier in the coming election.


  • There will also be many people in the Duma with criminal past.

    -- The Russian Ministry of the Interior estimates that some 20% of the candidates have criminal records and are running primarily to get parliamentary immunity. Some projections suggest that fully one tenth of the Duma could be composed of people with dubious backgrounds who are likely to be willing to sell their Duma votes to the highest bidder.

  • All these factors—centrist stagnation, party atomization, bribable deputies—make it likely that the executive will maintain its dominance of the Duma……which underscores the high stakes of the Presidential election that the Kremlin is trying so hard to control.

    In a nutshell, what does all this mean for the development of Russian democracy?

    • First, as I have said, holding the election is clearly a positive.
    • Second, the heavy hand of the Kremlin is a clear negative. If fearful of a defeat in the Presidential election, the Kremlin might well try to postpone it.
    • Third, the feeble development of legitimate parties gives the state a great deal of latitude to manipulate the political process.

    This means that, for now at least, the struggle to develop a civil society is being lost.

    Russia’s Domestic Outlook

    Russia’s political and economic outlook for the next few years is bleak, but it is not foreordained to remain that way.

    • There are new forces in today’s Russia, such as small businessmen; increasing numbers of people who travel outside Russia; people who connect through the Internet; people who have founded journals and newspapers where independent views are expressed.
    • How much this group will grow in the coming years is a big question mark. But that potential is there.
    • As long as elections are held, remain relatively free, and especially if they become fairer, there is the hope that Russia will change its current trajectory toward authoritarianism.

    As I mentioned earlier the forces for change are already underway. It is an open question however, as to how far they will get. But today, as never before, Russian leaders will have to meet the international community half way, if real progress is to be sustained.


    Looking beyond Russia’s political and economic concerns, the second Russian-Chechen war in this decade is an on-going disaster – for Chechnya and for Russia itself. In the region, the conflict is promoting violence and instability. Experts on the North Caucasus and Russia see it as a no-win situation. They note widespread Russian hatred (I use the word advisedly) of the Chechens and use concepts such as "extermination" and "genocide" to describe Russian objectives.

    • It is difficult to say how and when this war might end. Perhaps a new Russian president will have sufficient leeway to seek a political solution, particularly if Russian casualties mount.
    • This much is clear: even if the Russian forces manage to overwhelm the Chechens and Islamic militants and occupy all of Chechnya, they will have alienated what is left of the population and will remain vulnerable to guerrilla hit-and-run attacks.
    • The Russian assault will stimulate anti-Russian sentiment and Islamic militants regionally, in Russia itself, in Central Asia and worldwide. This is something we will have to watch closely.

    The repercussions for Russia itself are not good.

    • The war in Chechnya is fostering a return to authoritarianism, with "the family" and the military determining policy with no accountability, controlling and using the media as a policy mouthpiece.
    • It is a war that will damage Russia economically, as it drains resources and attention from urgent social and economic problems.

    To draw attention to another regional aspect of the war: the decibels of Russian accusations against Georgia have been mounting, with charges that Georgia is abetting the Chechen cause by allowing fighters and supplies to reach Chechnya through Georgia. To make matters worse, Georgia continues to reject Russian demands to allow Russian troops on its territory to stop this transit.

    • Although it is true that some support may get to Chechnya through Georgia, it cannot be in the amounts intimated by Russia both because the Georgian government is intent on blocking it and because the mountainous terrain between Georgia and Chechnya makes it impossible.
    • Georgia is denying the access of additional Russian troops access to Georgia -- for sovereignty reasons and because these troops would come to stay, joining Russian troops already there that Georgia wants withdrawn.


    As you know, Yeltsin is currently in China, a trip he undertook against the public advice of his doctors..... This trip is part of the development of what Russia and China call a strategic relationship.

    • There is clearly a congruence of views between the two countries on a number of issues – including resistance to outside interference on what the two countries call strictly internal affairs, which for Russia means its brutal campaign in Chechnya and for China its repression of the Falun Gong.
    • We expect a glowing report on the development of the relationship.
    • But we do not see the emergence of a full blown alliance with coordinated positions and actions on all issues.

    The part of the relationship which is most strategically significant is the Russian sale of weapons and technology to China.

    • While not of a threatening nature to the US, at least so far, these sales inevitably help to speed up the strengthening of Chinese military capabilities.
    • Ironically these sales are being driven not by a Russian strategic vision -- indeed a number of Russian security officials are uneasy about the strengthening of their eastern neighbor -- but by pecuniary motives.
    • These sales are not only a foreign currency earner for Russia but for some of its defense industries the means of survival.

    Arms Control

    Turning to another concern, there is a certain ambivalence in the Russian view of arms control today.

    • On the one hand Moscow appears convinced that some arms control agreements blatantly favor the US. START II is seen as biased in its requirement to eliminate landbased MIRVed ICBMs that were always the backbone of Soviet strategic nuclear forces. CFE is also seen as one-sided including in its imposition of some controls on Russian troop deployments on Russian territory proper without imposing similar constraints on the US.
    • On the other hand, Moscow realizes that those agreements are the only way it can constrain the economically superior West, be it in Europe or in the strategic arms arena.


    -- Moscow probably sees strategic arms negotiations with the US as its last claim to superpower status. While Moscow will maneuver as hard as it can on various issues -- for instance, vigorously opposing in principle a US National Missile Defense or the tabling of a resolution in the UN calling for the preservation of the ABM treaty -- it will still prefer to continue participating in the process.


    -- But with the decision making system in Moscow so disjointed and unpredictable, we are watching carefully to see if this less than enthusiastic Russian commitment to arms control endures.

    Let me stop here before I throw you all into a paralyzing depression. I wish the outlook we now see for Russia were rosier, but I would emphasize that the future we see is characterized more by uncertainty than pessimism. Much is for the Russians to decide. I look forward to your questions and comments.

    Historical Document
    Posted: Apr 03, 2007 08:57 PM
    Last Updated: Jun 20, 2008 08:05 AM