(ESTIMATED DATE) GORBACHEV'S DOMESTIC GAMBLES AND INSTABILITY IN THE USSR (DELE

Created: 9/1/1989

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Gorbachev's Domestic Gambles and Instability in the USSR Wf

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Gorbachevs Docnestk Gambia Instability la the USSR B

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and other Soviet leaden are concerned about serious future breakdowns of public order in tbe USSR. This concern is well justified. The unrest that has punctuated Gorbachev's rule isransient phenomenon. Conditions are likely to lead in the foreseeable future to continuing crises and instability on an even largerthe form of mass demonstrations, strikes, violence, and perhaps even the localized emergence of parallel centers of power. This instability it most likelyegional basis, notoverlapping crisesinking together of centers of unrest could occursfMBL

in the USSR is notroduct of gfosnou. and some of it isignGorbachevreforms are taking bold But Gorbachev's claim that instability otherwise merely reflects the surfacing of problems that were latent or repressed under Brezhnev is only partly true. The current budget deficit and consumption crisis is largely due to policies Gorbachev himself has pursuedS. And the prospects for further crises and expanded turmoil in the future are enhanced by key policy gambles he is taking now:

In the nationality arena. Gorbachev is gambling on defusing ethnic grievances andore consensual federative union through unrestrained dialogue, some concessions to local demands aimed at eliminating pastonstitutionalization of union/republic and ethnic group rights, and management of ethnic conflictubstantia! degree through the newly rkmccratized Soviets

In the economic arena. Gorbachev is gambling that, by putting marketi-zation on hold through tbe postponement of price reform, and byhort-term "stabilization" program, he can avoidwith the public and reengage in serious economic reform without steep costsater date.

In the political arena.ambling that, by transforming the Communist Party from an instrument of universal political, social, and economic managementrain trust and authoritative steering organ, while empowering popularly elected Soviets, he canore effective mechanism for integrating Soviet society and handling social

tc ions

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Gorbachev has nohoices, and other approaches would not necessarily be safer or more successful. But these gambles, understandable and even desirableemocraiic standpoint, are based on questionable premises and wishful thinking:

Ihe aspirations of many non-Russians will never be satisfied within the framework of maximum rights the Soviet leadership could grant union republics or so-called autonomous ethnic formations within national republics while stilltrong federative USSR. Allowing these people freedom to protest without being able to redress their basic grievancesecipe for escalating crises.

Because the deficit reduction plan is likely to fall far short of plannedand because it is unlikely that supply can catch up with consumer "needs"rice-induced change oo tbe demand side,emergency financial "stabilization" program more likely than not will fail. In the meantime, circumstances for introducing marketization of the economy will have become even less propitious than they were when this program was introduced, setting the stage for continued corruption, protracted economic crisis, and retreat to the old "command-edict" method*

Gorbachev's attempt lo reform the Communist Part> is basedisionary notion of what it could become, and is in practice undermining its ability to integrate Soviet society before new political institutions arc capable of coping with mounting popular demands unleashed by glasnoti and failing economic performance

As Gorbachev's various critics correctly contend, his gambles are likely to generate instability over both the near and the longer term,f)

The odds are high Ihat labor unrest or ethnic strifeeven within the next sixstrong pressures within the Soviet leadership to crack down much harder than it has to date. Soviet leadersroad range of instrumentalities they can employ to dampen

traditionalist restoration that would attempt to "draw the line" in variouswiih respect to democratization of the party and Soviets. glasnosi in the media, the conduct of informal groups, and expression of "nationalist"would accept the need for significant change, including reduction in military spending and decentralization ofUnlessegime chose to move ahead vigorously with marketi-zation (not impossible, but highly unlikely) it would obtain possiblehe near term but suffer high medium- to long-term instability, leading toward Ottomanization or upheaval from below. If Gorbachev were not overthrown in the near term, an attempt to turn the clock back would become morethe reaction of increasingly well-entrenched pluralistic forces- -and could thus also be nastier, possibly involving the armed forces and takingenophobic Russian nationalist coloration.

Whether or not Gorbachev retains office, the United States for the foreseeable future willoviet leadership that faces endemic popular unrest and that,egional basis at least, will have to cmplov emergency measures and increased use of force to retain domestic control This instability is likely to preoccupy Moscow for some time to come and -regardless of othera return to the arsenal state economy that generated the fundamental military threat to the West in the period since World War II. Moscow's focus on internal order in the USSR is likely to accelerate tbe decay of Communist systems and growth of regional instability in Eastern Europe, pointing to the need for post'Yalta arrangements of some kind and confronting the United States with severe foreign policy and strategic challenges. Instability in tbe USSR will increase uncertainty in the West about proper policies to pursue toward Moscow, reflecting nervousness about Soviet developments but noncha-

jt defense, and will strain domestic and Alliance decisionmaking.

Domestic policy successes or failures will be the paramount factor ultimately determining Gorbachev's retention of office, but foreign policy achievements that allow him to justify further cuts in military spending on the basiseduction in the external "threat" would give him more room for maneuver. Western actions that could be presented by his opponents as attempts to "take advantage" of Soviet internal instability could hurt Gorbachev 1

By putting economic reform on bold and pursuing an inadequate financial stabilization program. Gorbachev has brought Soviet internal policyateful crossroads, seriously reducing tbe chances thai hisittake the path toward long-term stability. Over the short baul. there appears to be lack of competence among his advisers in the area of monetary and fiscalore fundamental weakness instrategy that will perpetuate instability is its hesitant approach to market nation and unwillingness to face up to the necessity of real privatization of ownership of capital stock and land. He and his advisers need help with economiceduction of instability over the long haul requires the steady extensionaw-based private ector J

Harsh repression of labor unrest or of food riots in Russian cities are certainly contingencies that couldesponse from L'SBut instability provoked by Gorbachev's gambles is likely to present its severest challenge to L'S policymakingrackdown in the ethnic arenaprobably not in response to communal violence, but in the contextove by Moscow to intervene in Russian-native clashes or to repress the drive for greater national autonomyrackdown is most likely in the Baltic region, but could also come intheCaucasus, Moldavia,down thein Ihe 1'kj.imr

Gorbachev has said he wants toonstitutionally structured federative anion, and movement towardystem would certainlyositive development from the L'S perspective. Gorbachev, however, is not interested in greasing the skids for dissolution of the USSR, and this iswhat acceptance of the more radical Baltic demands would imply. Unless Gorbachev is prepared topecial status for the Baltic republics, and is able to win necessary political support for such aoirect and violent confrontation between Moscow and the Baltic peoplese l> f| ^

Rrvtrie

ConlenH

Key

Scope

Introduction

Nationality Policy Gamble: Concession* Within Limits Economic Reform Gambles

Postponement of Price Reform

The Crash Budget Deficit Reduction. Resource Reallocation, and Consumption Program

Selective Structural Reform

Political Reform Gambles

Transformation of the Communist Parts

Empowering Democratized Soviei*

ImplicatroM

Stability

Political Outcomes

Implications for the United

wwm

Scope Nole

reportroad look at Gorl

implications for stability in tbe USSR.

domestic strategy and its

Blank

systematicaoc to source ine vjnoui judgmentsthe projective sections of the report, arethey are in all estimativea combination of extrapolation and logical infer-

The reportpeculative paper draftedenior analyst in the Office of Soviet Analysis.eriod of epochal change in the USSR, anticipating the futureazardous undertaking, and tbe issues dealt with in the report hardly invite unanimity of judgment. Although there arc differences among analysts on specific issues, the report's conclusions do reftect our sense of the problems and challenges that confront Gorbachev's revolution and the general direction in which it is now^

Gorbachev's Domestic Gambles and Instability In tbe USSR^

Despite ihe increasingly pesiiroitttc tenor of receni assessments in Moscow of Gorbachev's popularity and prospects, and rumori of coup* or military mleivee-uon. bis major sains in the Politburo atlenum of the Central Committeeonce again great tactical political skill in transforming attacks against Bis line into movement forward. For the time being, at least, tbe future of ptrestroyka would appear to be less dependent oo politicalhean onnce

Many factorsaffect this longer terraA key one, however, ii Gorbachev's broad sense of where he wants the Soviet Union to go and bow be seeks to get thereis tbe focus of this paper. Western analysts disagree over the extent to which Gorbachevet of stable long-termLike Soviet observers, they ire also uncertain whether Gorbachev's stated objectives arc always necessarily his "real" objective* Tbe premise of this paper is that, while his positions have evolved over time, Gorbachev docsairly coherentbutf tbe future that is revealed tn both classified and uncfassifed sources The existence ofision decs not. of coarse, preclude tactical dissembling and ad hoc adjustment to circumstance*.

Gorbachev has insisted that the domestic revolution that he has launched in theinvolves radically dismantling an existing system of more or less stable, if stagnant snd poorly performingthe only path open. In fact, perettroyka. glasnost, and demokraiitaistyo were not and ire not the only options open to the Soviet Union: they represent the ultimate gamble on Gorbachev's partiberal, reformed Communism is possible and that tbe destiMiration brought by change isWh'.lc denying bis own fundamentalfor instability. Gorbachev hat claimed that some measure of itecessary corollary of reform And. in fact, instability arising from certain types of change

ign of progress. Yet glainost hss accelerated the dektitimizauoa of tbe present lysicnt-li bat irretrievably destroyed the regime's capacity to use Marxist-Leninist doctrine as an instrument of political control And it has weakened popularto authority.

ow embarkedet of related gambles as be seeks to reform ethnic relations, the economy, and the general political system These too are producing crises, on which Gorbachev hope* to capitalize to provide further momentum for pt'tt-ttoyka. From these crises new instability will arise, with the key questions being: bow serious willof thtt instability be. and what types of crackdown is it likely to inspire? To call Gorbachev's cbotces gambles, of course, docs not imply that other approaches would necessarily be safer or more suecensful; in each case, the trade-offs are not easyfl

Nariooality Poftcy GaatMr: Co-cessions With* Units

ramework for dissolution of the USSR is sot on Gorbachev's agenda. Yet be does seek solutions to the nationality problem that enjoy legiti-roecy. are not simply imposed by Moscow, andkveb of repression thai would wreck bis overall policy of ptrtiiroyko. The vision he has articulated over tbe past year orrecently atlenum of tbe Central

Transition of the USSRe facto unitary empire tempered by tokraliOD of local boss ruleore consensual union with real federative conient.

Constitutional delimitation of the functions of the Center and the national republics, wuh an increase in the authority allocated to the republics and tome decentralization of operational powers within the Communist Party.

Removal of discriminatory andio (he ooelopmeni of non-Ruiaian languages andhiletrategic role for Russian as (he language of micrethnic communication

Equalization of the rights of all nations including minor nationalities and RussiansL balanced by equalization of the rights of individuals regardless of their place of residence

Integration of (he national republicsingle unionwide economy, in which the "socialist market" harmonizes tbe interests of the multiethnic whole with tne interests of tbe ethnic parts, bul in which there is abosorne devolution of power to tbe

The Soviet leadership confronts two quite different types of ethnic crises; tbe assertion of traditional nationalist demands for greater cultural, political, and economic autonomy from tbe Center, and rageby economic and social grievances that finds an outlet in communal violence In principle, the first type of crisis can possibly be resolved, if not through political dialogue (there are many forms of autonomy and evenhen at leastype of crackdown that does not invoke physical force, whereas the second type requiresf course,ore sympathy on the part of outside observers

In nationality policy. Gorbachev's gamble lies mbe has permitted for public expression ofand demands He has acquiesced inof "informal" organizations in therepublics that, by any standard, arc"nationalist" views He has toleratedof ethnic platforms by republicorganizations Wiih some exoeptions, heto resolve nationality problems throughand has generally exercised restraint incommunal viojejice. orlhmcrat tons Indeedosoo*

may be willing to govetyiaTwffleeTTaJticaemands, provided there it no deviation from tbe Center's line ua foreign policy, defease policy,lest ^ jjijja^jfinancul-rnorie'jrj policy.

Gorbachev is evidently convinced that the potential exitts for the emergenceroadly shared sense of genuine unionwide community among most Soviet citizens Ethnic instability, be seems to believe, antes basically from past policy mistakes andThus, ethnic unrest can eventually beif these errors are corrected and legitimate ethnic grievances addressed He has issued several stern warnings againstl the9 plenum of the Central Committee be observed tbst "the timeome to talk with tbe clear ,ind forcible language of law about conditions under which nationalist, chauvinist, and other extreoust organiza-cons can and should be banned and disbanded by theut be probably believea that attempts to "draw tbe line" through coercion are likely to trigger still higher levels of ethnic tension and play into tbe bands of opponents of ptttuoyka And be seems to be counting heavily oo the reconstituted political institutions of thethe empowered Supreme Soviet and local Soviets- to provide athrough which ethnic interests and demands can be accommodated He may hope tooalition between reformers in Moscow and rnoder-ates in the non-Russian republics. In the Baltic area, he appears to have gambled that prudence willover passion, tbat republic party leaders will be able to convince the population that Moscow mil uliimiiely resort to force if compelled to do so. and that the republics shoulda reckless lurch towardwhat they now stand to gain.

However, Ihe radicalization of ethnic demands and expansion of the mass popular base for ethnic asscr-liveoess we see occurring, as well at tbe entrenchment of communal noJence. suggest bow tenuous tbeare for Gorbachev's strategy. Lifting the lid on the nationalities has energized anti-Russianamong the titular nationalities after whom the republics arc named, created great anxiciy among tbe Russian settlers who constitute large fractions of the population in major cilia in these republics, andath for cross-republic ethnic strife Ii has also activated latent conflict between titular and small

nationalities,orn of moreefugeesnd set the stag* forpoteniially sharp Russian backlasha at least one ease. Utbaa-ma, it il possible that the republic party organization may proclaim its independence of the CPSU. While security and economic interests probably willsome of tbe titular nationalities from seeking to secede from the USSR, theae inhibitions may not apply to Balu. Belorusiians, and Ukrainians fJJ

economic Reform Gambles

In the economic reform area, Gorbachev's vision postulates creationelf-regulating "socialisisystem ia which central physical planning has been largely eliminated and enterprises makeessentially by responding to market forces. Decision cues arc provided by prices sci largely b) supply and demand, and inputs are acquired through direct contracts and wholesale trade In ttm system the stateoordinating role, sets the "overall normativend takes the lead inscience and technology, infrastructureenvironmental protection, establishmentlnancial-banking-tas system, enactment of antimooo-poly measures, and institutionalization of the entire systemtructore of law. Operational control would pais from middle levels of tbe bureaucracy to the basic production unit, reflected inreakup of large economic conglomeratesransfer of ccav troi from the economic bureaucracy to production collectives (especially throughndf enterprise management, in whichcollectives elect their managers and oversee key production decisions The "socialist" aspect of (his postulated system woald apparently consul of two features, retention and expansiontrong welfare stale component (Sweden is mentioned as an eiamplc tond continued public ownership of at least most land and capital stock, although leasing and other arrangements would substantially modify (he concept of property ^|

Gorbachev's own policies,the steep reduction of revenues from stale alcohol sales, the financing from the budget of the crash machine-building program, wage boosts for some categories of

workers, increased spending for social programs, and escalating fooda rapidly riling budgetary deficit and shortage of cccjubut goods

sufficiently ominous lo persuade turno agreeslabilizatioa" strategy for Use neat several years. The main elements of this strategy are (a) postponement of retail and wholesale price reform: tb) tbe adoptionrash budget deficit reduction, resource reallocation, and consumption program: and ict continued pursuit of selected elements of structural reform. This change of course bas broughi Soviet domestic policyateful crossroads^jpj

Poslponemeat of Price Before Gorbachev's statement* throughg strongly favoring price reform make it abundantly dear be understands that full transition to an economy in which financial calculations effectively determine decisionmaking depends on price reform.he has publicly and repeatedly committedsince iben to postpone retail price reform "two or threeo discus* it with the public before doing anything, and not to change prices without public consent. In ihe absence of retail price reform, planned bikes in wholesale prices would require increased slate subsidies that would add to ihe financial imbalance Moscow ij fighting lo bring under control, andhas also delayed these increases irtdefinitcly There is ao mystery "by be bas agreed to thia critical policy position: to proceed with price reform al this point would also haveifficult gamble. Gorba-cbev and hit advisers wete deterred by tbe prospect of having lo copeossibly violent popularto price increase, hopeduy social peace, and convinced themselves that conditions to move on prices would be snore propitious later once financial "stabilization" bad been achieved aad hyperinflation averted, the monopoly factor dealt with, and otherJPJ PJJ

The costs of this gamble arc likely to be enormous By largely postponing (he establishment of theprerequisite for economically rationalthe gamble blocks workable deceairaliraiion. the introduction of genuine wholesale trade, and

reliance oo financialthus effectively putting markctiration on bold irrespective of other imponinl constraints. Failureeal with wholesale prices -ill intensify ihe problems and costs in (he future of currentlynonrenewable resources ictpr-cially energy andI will also build further irrationality into investment and tbe stock of fixed capital, imposing still higher economic and social cosu downstream for corrective actions. Subsidies to agriculture will also have to rise. ^

On the retail side, Gorbachev's talk about price reform has been an invitation to tbe population lo increase boarding of consumer goods The longer retail prices are frozen, the more the pattern of consumer demand is distorted, as faulty signalsproducers and consumers If food sales increase, so will food subsidies Most important, delay may make tbe ultimate problem of dealing witb retail price* laat much more intractable: prices that might only have bad to be doubled, let us say.delay have to be quadrupled. Meanwhile, theof retail and wholesale price reform will expand corruption throughout the economy,an adverse effect on popular morale and public tolerance for perenni .

Tbe Crash Budget Deficit Reduction. Resource Reallocation, and Consumption Program

In thebe average annual budget deficit7 billion rubles. This figure rose7 billion rublesillion2 billionI Aprillion9 Alarmed by the growing financial imbalance in ihe country, the Soviet leadership has approved anprogram to reduce expenditures on' defense, subsidies to unprofitable enterprises, administrative cosu, and social programs, and to increase revenues from imports of consumer goods turnover uses on increased production of consumer goods, and social insurance payments There isof financing the deficit, in pan at least, through the sale of state securities and bonds bearing an interest rateercent. The strategy has also

Smu OHitkM mm Hiate* ntobc SO wm Sontt U'twtnd (et wax tecum at heavy iadastrt the. reduction is to be 40

accelerated conversion of defense industry for civilian production,rash expansion of consumer goods production by all branches of industry, and reversed signals by accepting tbe recommendation to initiate increased imports of consumer goods.hope is that he can "saturate" the consumer market, mop up some of the huge cash savings of the population, eliminate shortages, avert hyperinflation or "bartenzation" of the economy, head off popular unrest, and create equilibrium conditions under which it will be possible later to initiate full marketization.

Yet it is highly likely that deficit reduction will fall far short of planned targets It will be hard to impose investment cuts on ministries and republics, and there isalready through the Supremeblock delays in tbe implementation of social programs. Inflation itself will begin feeding hack to raise the level of government spending.gains ia projected revenues from turnover taxes are based on unrealistically high targets for the production of consumer goods, and subsidies forand other consumer goods willraio' drain on the budget. H

There are other problems with the "stabilization"rice imposed change on the demand side, it is unrealistic to hope that supply can catch up witb consumerhe across-the-board campaignimplemented through the very "command-edict" methods that Gorbachev says he deplores -is likely to result in inferior products, high costs, and waste Expansion of consumer-goods imports will impose still greater stress on Soviet hard currency reserves, force acceptance of higher levels of indebtedness, and defer imports for other sectors of tbe economy. At tbe same time, fear of the economic and political consequencesigher hard currency debt, and recognition that imports would have to be far greater to substantially diminish the savingsre likely to inhibitentral component of financial stabilization. On the investment side, radical, abrupt shifts in proport'ont historically have -by ignoring tbeof different economic

resources and thrown tbe loseziilipin.ot inconceivable ikal ibe magnitude of cvU projected in heavy industry couldhain reaction of producer-good supply shortages, leadingpiraling downturn in production in the economy.tM

tractmal Reform

Gorbachev has by no means acknowledged that his decision on price* and macroeconomtc "subdi/ation" puts economic reform on hold. He talks as if he wishes tc move ahead. At the9 plenum of the Central Committee be called attention to forthcoming discussion by the Supreme Soviet of draftlaws on ownership, land, leasing, republicrights, the local economy, self-management, and tauiion And. in fact, there is momentum to press forward with implementation of' Law on the St3te Enterprise and elements of reform that are preconditions of marketizaiion, such as expansion of enterprise rights in setting prices, wages, and output locls; partial derationing of industrial supplies, and reduction tn the number of plan indicators. In the absence of rational prices and other essentialhowever, these steps have the perverse effect of promoting arbitrary or monopolistic price increases rather than cost reduction, wasting "cheap" energy and raw materials, encouraging wage increases not matched by productjviiy gains, and motivatingto produce the wrong output mix. Theof some economic decision making authority from tbe Center to the republic and regional levels, which is abo being conducted under the rubric of economican have some beneficial effects, but risks simply transferring "command" methods from the Siate Planning Committee to local bureaucrats and strengthening autarkic tendencies that weaken overall

A Gorbachev initiative with serious long-termhas been the fostering of new forms ofand management of production units.believes lhal ihe establishment of proprteiar, interestasic key to economic rcvitaliiation and that ibis condition cannoi be achieved under thedepersonalized state ownership of the means of production Thus he is pushing strongly forof the proposition that "various" forms of ownership are legitimate underet, at

the same time, be has sharply attackedownership of the means of production,this withlthough bethe solution to this ideologicalemphasizes over and over, is ihe liaiint ofand land to production collectives He hasnot just agriculture and services, butofe dearly hopes lhai"ownership" will engender proprietarycombat monopoly, and defeat bureaucraticavoiding thesocial consequences of real privatization.not too distant future it is quite possiblewillig campaign lolessehcJdir

The difficulty wuh Gorbachev's calculation is that experience in both Eastern Europe and the V> est suggests that Icasebolding docs io; produce the same positive benefits as private ownership, although in certain limited situations the results may be useful. Le3seholding does not provide the basis for creationrue capiial market, with the sale and purchase of production assets. Thus market prices for capital and land cannot emerge. Prices for these resources would still have to be set by planners and could not reflect particular circumsiancea or changes in values over time Nor docs leaseholding create the same interest or empowerment of specific individuals to seek to increase tbe value of enterprise assets. On theit may well make required investment and structural rationalization decisions more difficult by encouraging leaseholders of state-owned propertyto "mine" their assets- diminishing theproduction capacity over i f

Possibly Gorbachev recognize* these problem* and sees leave holding as an ideologically defensibleci 'ngci iSfmj'aniiliono_ei fl

suggests.rejectate private ownership on ideological grounds and believes that leaseholdingorkablealternative. His attacks on private ownership

Secret^"

been complemented by hedging in his defense of cooperatives By making these politically convenient accommodation*he dommaai cofkctimiof Soviet elites and the population,ime in which the absence of legally regulated markets is spawning growing corruption throughout thesector of tbe economy. Gorbachev isurong impulses that exist to reassert "adminisira-live" controls over the economy/

The collectivisi predicament carries over into the sphere of management Gorbachev has vigorously supported workplace dcrnceratiution, including the election of managers,eans of breakingto perestrayka within tbe bureaucracy and overcoming alienation and apathy among tbe work force The principle of electiViiy of managers was codified in the Law on Slate Enterprises, adopted inn combination with collective leasehold -ing. however, workplace democratization wouldpotentially atbe setting the Soviet Union on tbe Yugoslav path. Il will probablyinvestment by enterprises, encourage unjustified wage increases, make it harder to broaden wage differentials, strengthen pressures to continue subsi-dinng enterprises operatingots, and promote inflation

Politicalmbles

Drawing on the experience of earlier economic reform efforts, Gorbachev has argued tbat economic reform will fail unless it is underpinned by political reform7 he has promoted political reform as the keyerestroyka His aim iseplace theStalinist system of political power witb an entirely new structure that is less centralized, moremore open to the unrestricted flow of political ideas and information, more "consiiiuiionalized" through fundamental law, and more protective of theivil liberties. The key changes arc those affecting the demarcation of functions and power between the party apparatus and the popularly elected Soviets.

through bureaus selected co-optatively at all level* of the party, representatives of tbe system's keyithe economic hierarchy, tbehe security organs,pariy'sownI have decided policy In this system the party bureaucracyitself routinely exercised the right to issue binding orders to officials in all other bureaucracies. It has also controlled the process of pcrsottael appointments to all leadership posts in all institutions, whether these posts are appointive or nominallyhrough the no menklatura system. Below the central level, the key function actually performed by tbe party apparatus has been to implement ruber than make or win converts for policy lu most important role in this respect has been to cope with incoosisiencies between enterprise production targcu and available tnpuu caused by incoherent economic plans (This it why top positions in the party apparatus, at least in the Russian Republic, have generally been stafTed withbe real rote of the army of "ideological" functionaries in tbe party has been not so much lo argue ihe party's position and build partyas to communicate what the party leadership's position is on virions issues The problem of party "authority" until recently was not particularlybecause there was no political com pet iti lion, few people were prepared to challenge the party line, and those who did were handledifferent bureaucracy -the KGB

Gorbachev appears to believe tbat tbe party should continue to iniegrate the entire Soviet systemits vanguarde has an altogethervision, however, of bow ibis function is to be performed In his view, tbe party should abandon iu de facto ctecutive and legislative activity It should:

Cede rulemaking power lo the sovieu and other stale or public organizations.

Stop issuing binding orders to all other

organizations

Curtail dictation of personnel appoint'nenu through the nomenklatura system

Remove itself from day-to-day involvement in the implementation of economic plans.

of tbe Communis! Party

In the existing Soviet system tbe Communist Party has provided the central mechanism of politicalUnder iu aegis, acting more or less collegially

At tbe tame lime, (he party should strengthen iu

"political" role by:

Serving aibrain trust at all levels to generate appropriate macropolicie*.

Winning authority for the party and iu line by force of persuasion in (he emerging competiiivc political arena.

Influencing elections and personnel appointmenis in all institutions by cultivating and presenting tbeandidates

> Incorporating (he interests of all strata of tbe population through broad external dialogue and internal party democratization Jpj

Gorbachev is, in fact, attempting to implement this model. He has weakened the Central Committee Secretariat and may be reaching policy decisions in an informal group outside the Politburo. He hasthe branch economic departmcnu in theorganizational base for day-io-day party intervention in the economy He has ordered party officials to exert influence through persuasion rather than command. He has attacked the nonrnklaiura system as prone to error and the perpetual.ondiocrity He is urging party leaders at all levels not to wait for instructions from above but to develop their own "actione is demanding tbat all party officials emulatexample and carry the case for peresiroyko to the population through the mass media. He it promoting competitive elections within the party. And be it instigating personnel cuu in tbe party apparatusarge-scale turnover of party cadres, to which he attaches great significance.

adres.

Essentially, Gorbachev's program implies tbeof tbe CPSU as il has existed and tbe creationorganization that is new in its functions,and relationships with other pans ofsystem Through this transformation (heto regain both the will aad the legitimacyetarrsorpnotis to succeed, it couldcreate an integrating vehicledemocratized sovieu and other electiveIl would also clear away resistance in theto pt't

The odds against the desired tranformauoa of the party, nonetheless, are formidable. Exhortation to exert influence through persuasioa is unlikely to give tbe pany enough moral authorityompensate for loss of tbe operational powerssue orders and dictate personnel appotntmenu It is questionable whether purging the pany apparatus will increase iu ability to operateompetitive politicalas much as Gorbachev seems to hope. Pravda complained editorially io June thatonsiderable pan of the pany apparatus is in total disarray and is unable to And iu bearings in the newnd it is difficult to identify, beyond presumed psychic rewards, what the payofTs arc to be that will motivate pany officials. Rather, the odds seem much higher that Gorbachev's strategy will simply undermine (he real-life CPSU, weaken its ability to bring ordertill nonmarkeiiied economy, increase uncertainty as to its role, further demoralize both cadres and rank-and-file members, and intensify tbe already high level of anger of tbe apparatus toward Gorbachev I

Empowering Deasoeralitf* Soviets

Gorbachev is banking heavily oo tbe sovieu being ableimely and effective manner to fill the vacuum created by his redefinition of the pany's role. What he seeksechanism that enjoys legitimacy, is sensitive to pressures from below, is able toconflicting popular imereatt and demands, is capable of controlling officialdom, and is nevertheless responsive at least in general terms to party guidance. With tbe election of the new Congress of People's Deputies and formation of the Supreme Soviet, the first meeting of the Congress id June and subsequent session of tbe Supreme Soviet, aad the upcoming elections to local soviet! in the fall. Gorbachev has launched Soviet politicsromising bat perilousjpjjpj

We should not exclude Ihe possibility that this venture will eveniually succeed. Much of tbe brief experience of the Congress and new Supreme

Sytti

emergenceew corps of middle-clatsthe frank discussion of formerly laboo topics, ihe role of deputies in helping io solve the miners' strikes, and the rejection of some nominees to the Council of Ministers provides grounds for hope But the politiciratwn of the Soviet population, the urgency of public needs, and the radicalization of demands made by the rapidly growing number of "informal" groups will impose severe strains on these newTolerance and compromise are not yet part of ibe political culture of either the new Soviet electorate or the new deputies. Political competition in this arena, contrary to Gorbachev's calculationi. may work against the establishment of market socialism. Conflictsr ethnic issues will behardhat workers" politics of unpredictablemay emerge. The new institutions currently lack most of the operational attributes of functioning democratic parliaments that help them to conduct business and deal with such pressures, and these can develop only with timej

Whether multiparty political competition will emerge as the new soviets evolveritical issue. With the formation of the "Interregional Group" of deputies, the collective action of Baltic deputies, and theof "workers"rganized opfosiliom has already arrived in the Supreme Soviet Some participants in these groups visualize the rapidof multipartynd several sroups out-side the Si

a system established in the USSR. Publicly, he has repeatedly criticized advocacy of multipart yism in the Sovietthat this would multiply cleavages in an already "complex" tocici) and. most important, would promote ethnic strife in thisbe would be aware that his invitation to informal groups toarliamentary politics could lead to the formation of other parties, -Ryzhko* and others have warned, but planned to maintain the CPSU's preponderant role by somehow. taming or co-opting the main opposition groups^

In the meantime, as Ryzhkov has abo observed, the creation of the new activist Supreme Soviet headed by Gorbachev introduces an element of profoundin the distribution of power and authority between tbe CPSU Central Committee and Politburo, the Supreme Soviet, and tbe Council of Ministers at tbe very top of the Soviet system. When local election* are held and empowered soviet* formed at all lower levels, this ambiguity will spread throughout the system, potentially setting the stageeneralized "constitutional" crisis. Large numbers of parlyare likely to be defeated in these elections To the extent that election by the populace lo thetoviei it seen toecessary validationarty secretary's tenure of office, political reform will sharply heighten anxiety and promote cleavage within the party apparatus Gorbachev probably hopesse tbe crisis resulting from elections to the Soviets to redefine formally, both constitutionally and through revision of the party rules, the division of labor and respective powers of party, state, and government

is conceivable that Gorbachev privately welcomes the prospective emergence of multiparty aim petitionong-term stabilizer of the USSR's new matsn this veeraito. be might hope simply to preserve tbe Communist Party's de jure monopoly long enough to effect the transfer of real power from the CPSU to the Supreme Soviet, at which point traditionalists in the party would be unable to prevent recognitionultiparty fait aocornpli. It it more likely, however, that -as he told Hungarian leaden Nyert and Grosz ia July- be is prepared to accept multiparty politics in Hungary but does not wast such

Imptlcal'eat Stabsbt)

Gorbachev's vitaoniberal Communist future seek* to reconcile satisfaction of ethnic demands with preservation of the Soviet mnltinaiional state, piece-meal introduction of marketizatton withnd democratization with maintenance of theParty's "vanguardinimizinghiis been central to bisit desire to avoid

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confrontation with (be population and to find "political" solutions to problems is reflected in his encouragement of polittciration of the population and tolerance of social turbulence; his readiness tohostility toward the Communist Party and the Soviet systemroduct simply of failure by the regime to eradicate pastis propensity to ignore ideologicalis optimism about reaching the "correct" solutions to problems through rational calculation, dialogue, and compromise: and his disinclination to use force or administrative ores-

These qualities arc reflected in the gambles discussed in this paper, which in turn are generating major problems:

In the nationality arena, glasnost and Gorbachev's gamble on defusing ethnic grievances andore voluntary federative union through dialogue is activating passions on all sides,erious secessionist challenge, and fueling anbacklash.

In the economic arena. Gorbachev's gamble on postponement of pricerash consumption program, and selective pursuit of certain structural changes has placed real markeiiMiion on hold, mortgaged its introductioninancialprogram that is more likely than sot to fail, possibly compromised its eventual success with strictures against private economic activity, and set the stage for continued corruption and protracted economic crisis,

In the political arena, Gorbachev's gamble onthe Communist Party along lines that have no parallel in single-party (or multiparty) systems elsewhere is seriously weakening the central existing mechanism for societal integration in the USSR, while the gamble on instituting guided democracy (hrough the Soviets is likely to impose large new strains on (he regime sooner than it provides an effective means for dealing with them.

Gorbachev has no easy options, and other gambles would have produced other problems. Wherever those problems might have led. the sel of problems Gorbachev has in fact fostered it likely to lead in the foreseeable future to major instability in (be USSR|ajBjjsjjjt

So far, neither the rioting, nor the communal violence, nor tbe derr>orjstrations that have occurred in the non-Russian republics have compelled Gorbachev to resort to more than limited doses of armed recession. The most violent conflicts bavc largely not involved natives versus Russians. However, with the escalation of ethnic assertivencss generallybeation of Baltic demands, and the growth of Russian nationalist sentiment, the stage is being set for major Russian/non-Russian conflict. Potentially, the most explosive near-term source of such combustion is the backlash of large numbers of Russians living in the borderlands to native attempts to assure priority of the local language, residency requirements forparticipation, and progress toward autonomy or even independence. The fears now displayed among Russians in the Baltic republics and Moldavia could lead spontaneously to confrontations that wouldlarge-scale intervention by Moscow. But they also provide fertile soil for provocation byopponents designed to force broad intervention that would undermine perestroyka. At some point, even in the absence of seitler-instigated conflict, native assertivencss is likely to precipitate confronta-(ion with tbe Center, however self-disciplined the non-Russians may be. One factor that could lead tolash might be Moscow's determination not to allow relaxation of controls in the Baltic republics torecedent for thej ^

Gorbachev has sought to replace Brezhnev's tacit understanding with (be population, which essentiallyuaranteed minimum living standard and social security benefits in return for political passivity,ew "social contract" that would provide greater economic opportunity and politicalin exchange for harder work and lest economic security. But his economic gamble is unlikely to generate the sustained growth in material rewards necessary to supportransition. At best, the policy willeteriorating situation; if it fails, (he result could be hypcrinfla(ion and the emergencearter economy. And the policy still leaves the economytate of protracted vulnerability* to at least three generators of an economic downturn that

would furibei enhance ihe likelihood of sircei poliiics: ihe incoherent current blend of "plan" andhe possible chain reaction of producer-good supply shortages noted above:strike activity

Gorbachev was able in July to deflect blame for ihe miners* strikes and turn them to his own immediate advantage, but only by granting major concessions lo the miners that will increase the deficit and may well enoouraBe more 2routsse u'limaiurruwliiics-

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eadytton^heir success, organizedwading formationass laborwhich might develop widespread support among workers who want the security of tbe old social contract as well as the tmprovcjljiuajity of life pertsiroyka promises]

CI as noii. the evaporation of fear of authority, and Gorbachev's attempt to mobilize popular pressure againsi bureaucratic vested interestswith consumer dissatisfaction and diffuseanger toward theapped latent impulses and energized poliiical moods at ihe base of SOviet society The old "transmissionthe trade unions and Komsomol- thatthe "masses" with tbe regime have, in the newive environment, become increasinglyElections to ihe Congress of People's Deputies revealed bow little confidence the party apparatus itself enjoys among the population at large.gamble on radically restructuring Sovietinstitutions is further weakening the oldlha: repressed popular unhapp-ress^

Opinion polls and abundant evidence from other sources suggest thai the public's priority concern is improving the standard of living. To the extent (hat the new Supreme Soviet and local Soviets act as vehicles for absorbing maw unresi. ihey are likely to press for welfare spending, wage increases, subsidies for unprofitable enterprises, delay of price reform, and other measures that will increase the diflkuliy of moving toward effective markeuzation. In this sense, the phasing ia of poh'tioal reform before ecooomic reform may have severe long-term |

But political competition encouraged by reform it giving voice lo oiher concerns as well about public order, crime, loss of control in the borderlands,destruction, erosion of traditional values, elite corruplion. and profiteering by cooperatives. This volatile mixture of grievances could, under conditions of continuing consumer deprivation, lead to outbreaks of anarchic violence orocial base for atiempts by political eliteseverse Gorbachev's policies I

Political Outconses

Gorbachev's gamblerotracted transition to marketira(ion. unless modified, is likely to delay serious economic revitaliiation indefinitely and create conditions of chronic instability irrespective of the destabilizing impact of ethnic conflict Under these conditions, governing the Soviet Union will become progressively more difficult Yet the fragmentation of poliiical power currently under way will probably continue. Within tbe party, divisions now visible pitting natives against Russians within the republics, republic party organizations againsi other republic party organizalions and againsi the Center, RSI'SR oblast party organizations against Ihe Centralapparatus, and liberal againsi traditionalist factions, will expand. And Gorbachev's personalwithin the parly and among the population at large will probably continue to decline, despite his political victory ai the September plenum of Ihe Central CommmccB H

Some observers have speculated Ihat anarchy will be tbe end result of these developments Thisighly unlikely outcome: if "anarchy" does occur, it will simply mark tbe transition from one set of political arrangementsnother. What is likely is thatwill force the Soviet leadership to choose from an array of crackdown measures, ranging fromthreats, to new restrict tons on freedom of speech and assembly, to bans on strikes, to personnel purges, to cxeilion of economic pressures.olice or military intimidation, to deploymcni of larger and moresecurity forces.eclaration of slates of emergency,mposition of martial law. Choices here

will hinge partly oo how threatening to regime surviv-al condition* of intubilitr arc judged to be. partly oa how effective in *upores*ing disorder given type* of crackdown arc predicted io be. and partly on how counterproductive the crackdown measure* arc held to be in terrnjof frustrating attainment of other key objective*

Tbe record suggests that Gorbachevigh tolerance for disorder, will seek as long as possible to find compromisend, when decisive action become* necessary, will attempt to select measures at the lower end of tbe crackdown scale. He seem* to fear that bloodshed resultingrackdown would seriously exacerbate conflict situations, be probably has not been impressed by the efficacy of force applied in Central Asia and the Caucasus, and he must fear the consequences for ptrest'oyka and his foreign policyroad and extended resort to armed might SJJBJBJJBjj,

Converging evidence suggests that there are strong differences in the Poiiibiiro over resort to muscle in dealing with instabilin

A mayor escalation of repression, especially if il involved the imposition of manial law, could well pose the question of who should lead the USSR. Currently there is much speculation in Moscow about martial Law. the acquisition by Gorbachev of unrestrained power,nd military takeovers Gorbachev might be inclined toroad view of his prerogatives as bead of state, and perhaps evenlimited emergency powers in an effort lo advance ptresi'O) ka He would be willing to escalate coercion somewaai to maintain order and isolate nationalist or othert the1 plenum of ihe Central Committee he condemned "extremist rallies that provoke intcrcihmc clashes and terrorize and intimidate people of othernd

declared thathreat to tbe safety and life of people antes, we will move decisively using tbe fall force of Soviete alto observed, with retpect to Nagorno-Karabakh, that "we viand before tbe need to take resolute measures we cannot allow anarchy, let alone bloodshed "MM

Yet it it highly doubtful thai Gorbachev would abandon hit reform program and his naturalby sanctioning indiscriminate violence, or engagead to seize dtctaional power through an alliance with hit political enemies. It is possible, however, that he might choose to resign raihcr thanrackdownajor imposition of martial lawl

tursiiy. ne could alsojuiliiy retaining office (if ne were indeed inclined to resign) on "lesser evil" grounds j

In the event that Gorbachev remains in power, his resort io force is likely to be limited, and instability will not easily deflect processes that appear to be heading toward further democratization of theI order, tome form of multiparty ism.r. ia the Baltic case,reakup) of tae Soviet multinationalGorbachev can avoid sharp political polarization and achieve some reinitilulionalizaiion of political integration through (he Soviets. If there i* financial itabiliialion and markctizatioo, there might be high instability in the near term (two to fiveourse could be set towardoears) socialWithout financial stabilization and markctization (which arc now in serioushere would be rising instability in the rtcar-to-medium term, high instability in ihe long term, and likely movement of Ihe Soviet system towardard-right takeover, or what hat been termed "Otiomamra-tion" low process of imperial decline wuhpiecemeal emancipation ofontexi of growing relative backwardness of the whole in relation to theJJ

The trendliberalization and imperialis perceivedear and present danger by some members of the Soviet political elite, who are shocked by what thev perceivereakdown of social discipline and losi of regime control. Their anxiety, fear, and anger could still crystalize in an attempted coup, legal removal of Gorbachev, or even

regime. It would accept tbe need for significant change, including reductions in defense spending and decentralization of management, butattempt to "draw the line" in many areas especiallyof the party and government, the media, tbe conduct of "informaP groups, and expression of "rLauonalist"n which Gorbachev's liberalism is seen as outrageous Although the odds are highraditionalist regime would increase restrictions on private entrepreneurial activity and marketization. it is not altogether inconceivableon whe waseadership might take advantage of limits on public expressionove forward vigorously with marketi/ation. Barring this slim possibility, the prognosis foregime would be near-term stability bu; high medium- to long-term instability, leading to Otiomani/ation or upheaval from below Al

exist among manyuccessfulor reactionary restoration, however, would solve neither tbe economic problems nor trie nationality problems, and thus would perpetuate

Implications for the United States

Under any scenario, economic tensions, acutedissatisfaction, labor unrest, and ethnic strife virtually guarantee tbat the United States will have to dealonet leadership that faces endemic popular instability. The chances that economic reform will significantly reduce tbe potential for instability in the foreseeable future are low, and are certainly less than tbe chances tbat Gorbachev's own gambles will foster continuing economic stagnation or declinewill maneuver to dampen instability through compromise and to avoid armed confrontation and bloodshed. He may muddle through more successfully than appears likely. But the cods are greatihat labor unrest or ethnic conflicteven within the next sixstrongwithin tbe leadership to crack down much harder lhan it has lodate Gorbachev may well agree to more repression in order to retain power. It is likely, in this context, that an alternative leader would not only inmate inore brutal reprcssior than Gorba-che* might, but would citehe pretesteneral attack on Gorbachev's political reforms.

length of Gorbachevs tenure is an important variable. In (he event that he is not soon overthrown, his gambles on ethnk and political reform are likely to increase the social forces of resistance to an onrsodox reactionevelopment wouldincrease the degree of coercion required to "restorehose intent onourse of action might seek to gain support from the military or KGB. or to mobilize elements of the working-class population to back their cause Political maneuvering to develop andass "workers'" movement is already under way. Gorbachev is seeking to enlist the "workers"orce for prrrwoyka Populist figures such as Bona Yel'ism may seek to appeal to the welfare-state preferences of (he working class.would espouse Beofiscist slogans designed to tap into tbe anti-intellectual, anti-Semitic, anticsp>-lalist. xetsoptsobic. Russian nationalist trsoods that also

Moscow's preoccupation wiih instability is likely for the foreseeableof othertoeturn to the arsenal state economy that generated the fundamental military threat to the West in the period since World War II. The Soviei leadership's focus on internal order in tbe USSR will probably accelerate tbe decay of Communist systems and growth of regional instability in Eastern Europe, pointing to the need for pott-Yalta arrangemcnis of some kind end confronting tbe United States with severe foreign policy and strategic challenges.in the USSR will increase uncertainty in the West about proper policies to pursue toward Moscow, reflecting nervousness about Soviet doeloprnents but nonchalance about defense, and will impose stress on domestic and alliance decisionmakir

9*

cope with Ihe crises thai promole instability. Gorbachev needs lo transfer more resources from military to consumer needs.ersonalhe needs to defend himself against charges that he is selling out Soviet security interests and has been seduced by praise from the "class" enemy. Thus, he needs demonstrable results from the arms talksll permit him to argue that the external "threat" has receded even further. Likewise, he needs trade and technology transfer from the West to overcome bottlenecks in the Soviet economy. Obviously, he does not need Western actions that call into question the efficacy of "New Thinking" in foreign policy, or that could be interpreted as challenging Soviet security interests globally, in Eastern Europe, or internally, or of "taking advantage" of Soviet internal instability.

The chances that Gorbachev will successfullythe dilemmas (many of his own making) that confront himthe longat best. But the process of pluralistic forces taking root in Soviet society strengthens the rule of law, builds constraints on the exercise of power, and fosters resistance to any turnaround in military spending and to rcinvigoraiion of an expansionist foreignwhich.argued above, will be strongly inhibited in any event by the insistent demands of consumption and the civilian sector. This process, andeactionary restoration that might attempt to bringasic shift in the Soviet Union's foreign posture, benefits greatly from each year's prolongation of Gorbachev's rule."jQ

A key weakness in Gorbachev's strategy that will perpetuate instability is its hesitant approach to mar-ketization and its unwillingness to face up to the necessity of real privatization of ownership of capital stock and land. Soviet leaders from Gorbachev down are, at the moment, uniquely open to contact with the West. Serious private Western dialogue with them and their advisers on economic theory could influence their thinking Reduction of instability over the long term requires the steady extensionaw-based private sector in the Soviet ecorwmy.-jl

Harsh repression of labor unrest or of food riots in Russian cities are certainly contingencies that could confront US policymakers with the need to respond. But instability provoked by Gorbachev's gambles is likely to present its severest challenge lorackdown of some sort in tbe ethnicnot in response to communal violence, but in the form of intervention to suppress Russian/native dashes or ihe drive of non-Russians for greater autonomy.rackdown is most likely in the Baltic region but could also come in the Cauasus^Moldavia.thethe Ukraine. M

Gorbachev has said he wants to create astructured federative union based on the consent of the constituent republics. Movement away from (he heretofore existing situation towardoal would in genera! be positive from the US standpoint. Howev. er. Gorbachev is not interested in creating afor weak confederation or dissolution of the USSR, nor would he be able to marshal! political support witbin the elite for such an outcome; yet this is precisely what acceptance of the more radical Baltic demands would imply. Tbe new draft CPSU platform on nationality policy hints alegionally differentiated approach to Soviet federalism. It is possible thai Gorbachev may be prepared topecial status for the Baltic republics, and this couldotential for evolution toward still greateride range of conhguralions of "autonomy" or "independence" is conceivable. Inontext tbe Soviets might be interested at some point in discussing withiheir regional security concerns, which would probably bear heavily onecision JH B

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