GORBACHEV'S DOMESTIC GAMBLES AND INSTABILITY IN THE USSR - AN IN

Created: 9/1/1989

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Dlrtctoratt ot

Gorbachev's Domestic Gambles and Instability in the USSR

An IntelliRcocc

9

TRACT-

Gorbachev's Domestic Gambles and Instability in the USSRaS

Judgments

Inlarmation aiaitablt asafU9 in ikili

and other Soviet leaders are concerned about serious future breakdowns of public order in the USSR. This concern is well justified. The unrest that has punctuated Gorbachev's rule isransient phenomenon. Conditions are likely to lead in tbe 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 is most likelyegional basis, notoverlapping crisesnking together of centers of unrest could occur.

Instability in the USSR is notroduct of glasnosi. and some of it is indeed aGorbachevreforms are taking hold. 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 pursuednd tbe prospects for further crises and expanded turmoil in the future are enhanced by key policy gambles he is taking now:

lhe 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 conflictubstantial degree through the newly democratized Soviets.

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

In the political arena. Gorbachev is gambling 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 tensions.

Gorbachev has no easy choices, and other approaches would not necessarily be safer or more successful. But these gambles, understandable and even desirableemocratic standpoint, arc based on questionable premises and wishful thinking:

The 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 on the demand side,emergency financial "stabilization" program more likely lhan 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 lhe stage for .continued corruption, protracted economic crisis, and retreat to the old "command-edict" methods.

Gorbachev's attempt to reform tbe Communist Party is basedisionary notion of what it could become, and is in practice undermining its ability to integrate Soviet society before new political institutions are capable of coping with mounting popular demands unleashed by glasnosi and failing economic performance.

As Gorbachev's various critics correctly contend, his gambles are likely to generate instability over both the near and (he logger term-JB^

The odds are high that labor unrest or ethnic strifeeven within the next sixstrong pressures within the Soviet leadership to crack down much harder than il has to date. Soviet leadersroad range of instrumentalities they can employ io dampen instability, ranging from stronger threats, to new restrictions on human rights, to police intimidation, to imposition of martial law. We have evidence in al least one case of sharp disagreement within the Politburo over the use of violence. Gorbachev has sought to avoid widespread use of

.AT- SOCOfi IRA CT-

physical force, probably calculating thai the fallout from repression would endanger his entire program of perairoyka as well as his foreign policy, while perhaps provoking more serious disorders that could lead to loss of control Almost certainly he would be willing to escalate coercionto maintain order and isolate nationalist or others he threatened to do in his report on nationality policy to the Central Committee plenum onetertain point, repression would mean abandonment by Gorbachev of his natural constilu-ency and his entire political program.,

J Alternatively, the imposition

of harsh measures could be associatedoup d'etat or legal removal of Gorbacbev.|

Provided he manages to hold onto power, two outcomes of Gorbachev's rule are possible, depending on how successfully the economy is marketized. In both scenarios. Gorbachev's retention of power depends upon avoidance of acute polarization of political forces and progress in ^institutionalizing means of political integration. This process would be reflected in further democratization of the political order, the emergence of some form of multiparty competition,oosening of the Soviet multinational empire. If political reform were complemented by effective financial stabilization and marketizatton. there might be high instability in the near term (two to fiveourse could be set towardoears)equilibrium. Without financial stabilization and marketization, on the contrary, there would be rising instability in the neaMo-medium term, high instability in the long term, and likely movement of the Soviet system towardard-right takeover, orrelative backvrartness of the USSRiecemeal breakorT of the national republics.ajaaaajj

Gorbachev's gambles and the centrifugal trends they have set in motion are already viewed with extreme alarm and anger by many members of thepolitical elite. But Gorbachev's major gains in tbe Politburo at the9 plenum of the Central Committee demonstrated once again how dimcult it is to translate conservative sentiment in the ranks into effective opposition to Gorbachev's rule at the top. For the time being, his power iooks secure. If.uccessful challenge were mounted against him over the next year or so, the most likely outcome would be a

traditionalist restoration that would attempt to "draw the line" inith respect to democratization of the parly and Soviets.s nasi in the media, the conduct of informal groups, and expression ofwould 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 possible stability in the 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 tbe clock back would become morethe reaction of increasingly well-entrenched pluralisticcould 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 employ emergency measures and increased use of force to retain dpmestic control. This instability is likely to preoccupy Moscow for some time to comeregardless of othera return to the arsenal state economy that generated the fundiiliury threat to tbe West in the period since World War IL Moscow's focus on internal order in tbe USSR is likely to accelerate the decay of Communist systems and growth of regional instability in Eastern Europe, pointing to tbe need for post-Yalta arrangements of some kind and confronting the United Sutes with severe foreign policy and strategic challenges. Instability in the USSR will increase unceruinty in the West about proper policies to pursue toward Moscow, reflecting nervousness about Soviet developments butabout 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 cots 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 "Uke advanuge" of Soviet internal instability could hurt Gorbachev.

vi

By pumng economic reform on hold and pursuing an inadequaie financial stabilization program. Gorbachev has brought Soviet internal policyateful crossroads, seriously reducing the chances that hisittake the path toward long-term stability. Over the short haul, 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 marketication 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 economic theory. Reduction of instability over the long haul requires the stead) extensionaw-based private sector.

Harsh repression of labor unrest or of food riots in Russian cities are certainly contingencies that couldesponse from USBut instability provoked by Gorbachev's gambles is likely to present its severest challenge to US policymakingrackdown in the ethnicnot 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 autonomy.rackdown is most likely in the Baltic region, but could also come in the Caucasus. Moldavia,down thein the Ukraine.sisssW

Gorbachev has said he wants toonstitutionally structured federative union, and movement towardystem would certainlyositive development from the US 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 anirect and violent confrontation between Moscow and the Baltic peoples seems likely.

Rrvmr Blank

Contcnis

Page

Judgments

Note

Policy Gamble: Concessions Within Limits

Reform Gambles

of Price Reform

Crash Budget Deficit Reduction. Resource Reallocation.

Consumption Program

Structural Reform ,

Reform Gambles

of the Communist Party

Democratized Soviets

Outcomes

for the United States

*

Scopereportroad look at Gorbachev's domestic strategy and its

implications for stability in the USSR. Descriptive sections of the report take into account the full range of classified and open-source information available, especially that dealing with Gorbachev's views, and arewith more detailed analysis produced by the Directorate ofNo systematic attempt is made to source the various judgments which, in the projective sections of the report, arcthey are in all estimativea combination of extrapolation and logical infer-cnce.flK

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

Rnrnt Blank

fflN'SOxJsrRACT'

w 7

Gorbachev's Domestic Gambles and Instability in the USSR

Despite the increasingly pessimistic tenor of recent assessments in Moscow of Gorbachev's popularity and* prospects, and rumors of coups or miliuryhis major gains in the Politburo atlenum of the Central Committeeonce again great tactical political skill in transforming attacks against his line into movement forward. For the time being, at kast. the future of perrsiroyka would appear to be less dependent on political struggle in the Politburo than on faltering regime performance JfJJJJJJ

Many factors will afTect this longer termA key one, however, is Gorbachev's broad sense of where he wants the Soviet Union to go and how he seeks to getis the focus of this

undoubtedlyign of progress. Vet glasnost has accelerated the dclcgitimization of the present synem. TThas trretnevaclv destroyed the regime's capacity to uiC Marxist-Leninist doctrine as an instrument of political control. And it nas weakened popular obedi-ence to authority. H

Gorbachev is now embarkedet of related gambles as be seeks to reform eihmc relations, tbe economy, and itical lystemTThese too are producing crises, on which Gorbachev hopes to capita lue to provide further momentum for pent' iroykc. From these crises aew insubility will arise, with the key qoestioni being: how serious will mani-fesuiions of thb insubility be. and what types of crackdown is it likely to inspire? To call Gorbachev's choices gambles, of course, does not imply that other approaches would necessarily be safer or morein each case, tbe trade-offs are not easy fJJJJJJ

Like Soviet observers, they are also uncertain whether Gorbachev's statedlways necessarily his "real" objectives. The premise of this er is lhat, wniie his positions have evolved over

yfBihTli'lliUai-'il'l^'i'i'I

Gorbachev has insisted that the domestiche has launched in thedismantlingre u:

TesssUt

iber

en talfor jn^tabililv. Gorbachev has claimed that some measure of itecessary corollary of reform. And, in fact. insubQity arising from certain type* of change

Nationality Policy GamoJe:imits

ramework for dissolution of the USSR is not on Gorbachev's agenda. Yet he does seek solutions to the nationality problem that enjoyare not simply imposed by Moscow, andlevels of repression that would wreck his overall policy of ptrtitroyka. The vision he has articulated over tbe past year orrecently atlenum of the Central Committee-

Transition of tbe

Re facto. .jlcrauon of local boss rule l

. union with real fe "

1

of ducriminaiory and provocative>ftc development oi iwn-Rumin languages ind cultures, "biteirateg'c role forne langL^^r ommunication.

E/jmlizaooa of tbe rights of iii ssaajara nncludtng minoi nationalities and Russiansi. Daianceo oy equalization ol Ihc rights o( individuals regardless oi tfteif piacc ol residence.

Integration of the national republics withinhich ihcnterests of lhe mntlicthnictbe interest! of Ibe ethnic pans, bat inre Is also tome devolution of power to'

an

. In principle, the first be resolved, if not through political dialogue (there are many forms of autonomy and evenhen at leastype of crackdown thai docs noi involve physical force; whereas the second type requiresorned, of course, thai inviits more sympathy on tbe part of outside observers rjraaaj

The Soviet leadership confronts two guileof ethnic crises: ibeieiile. cultural. enter: nnd raije gener-

a led b) eco outlet it. type of crisis can

In nationality policy, Gorbachev's gamble lies in the tr^nf he has permitted fo: dcmsnds.

ing

absorption of el

that,

views. He has tolerated.

tior.a

ic

togne and has generally exercised 1communal

With some exceptions, be has litv problems through dia-

Gorbachev is evidently convinced thai ihc potential exisu for ihc cmergenceroadly shared seme of genuine unionwide community among most Soviet citizens. Ethnic iostabiluy. he seems to believe aHm* basically from nati policy mistakes and

unresi can eventually be modrra'.-ed if ihese crron are cortecrcd and legitimate ethnic grievances addressed He has issued several stern warnings againstl the9 plenum of ihe Central Committee be observed that "the timeome to talk with the dear aad forcible language of law about conditions under which nationalist, chauvinist, and other extremistcan aad should be banned and disbanded by theut be probably believes thai attempts to "draw the line" through cnerc)on are hkelv lo tn

and play into' hands of opponents of perestroyka. And be seems to be counting heavily on the reconstituted polincar institutions of

ihetheecti-

ic area,

ne appears to have gambled that prodence will Iri-umph over passion; that republic party leaders will be able to convince the population that Moscow will ultimately resort to Jorceompelledo so. and Thaitfae republics shoulda reckless lurch towardwhat they now stand io gain.

r, the radicaliration of elhnic demands and expansion of tbe mass popular base for ethnic asser-livcness wc see occurring, as well as the entrenchment of communal violence, suggest bow tenuous_thc pros-

ifting the licTon

tusstan

nationalities after whom tbe are named, created great anxiety among tbe Russian settlers who constitute large fractions ol ibe population in major cities in these republics, and

a path for crws-rcpublic ethnic strife. Itetween tnular and small

Secret

low ol moreOO jaacraal refugees tiaccjno mi ihc siageotentially iharp Ruuian backlash againsts "permusiverics! IBeast Artethua-nja, il is possible thai Ihc republic party organization laim its independence of the CPSU. While security and economic mtercsis piotwblv willsome of lhe titular nationalities from seeking to secede from ihe USSR, these inhibitions may not apply to Baits. Belorussiam. and Ukrainians

Economic Reform Gambles

In tbe economic reform area. Gorbachev's vision postulates creationelf-regulating "socialistsystem inely eT

2l

Decision cues are supply and

_ _ es set largely by and inputs arc aCQuircoTruoBgh dueci contracts and wholesale trade in this system (he siaieoordjaaimi rote, sets the "overall normativend takes the lead in promot-ing science and technology, infrastructureenvironmental proircnon. establishmemTTa nnaricial-banking-tax system, enactment ol antimono-

institutionalization of the entire syslema stnicture of law Operational control would pass from middle levels of the bureaucracy to the basic production unit, reflected inreakup of large economic conglomeratesrol Irom the economic bureaucracy to collectives icspcciall) triiougfi leastfigiaadtblo^rnoc-rauut<on of enterprise management, ia which wot-ken' collectives elect their manager* and oversee key production decisions The "socialist'1 aspect of ttus postulated system would appurently consul of two features: retention and expansiontrong welfare state component (Sweden it mentioned as an eumple to err.uiite'i.1 teast most land and capital stock, although leasing ano otrrangements would substantially modify the concept of property. afjJB

Gorbachev's own policies,tbe

Sleep rcducnon of rocryei frprp tbe liMnctng from the budget of the crash machine-building pro|ram. wate boosts for some categories of

workers, increased spending for social programs, and escalating fooda rapidly rising budgetary deficit and shortage of consumerminous to persuade himo "stabilization" strategy for the next several

id continued pursuit ot setected elements of structural reform. This change ol course has brought Soviet domestic policyatefulmm*

PosfpOMBfnl of Price Reform Gorbachev's statements throughtrongly favoring price reform make it abundantly clear be understand! that full transition to an economy in ^

nine

on price reform.he haTpuoTicl) and repeatedly cciiimittcd him->elf unce iher. io postpone retail price reform "two or threeo discuss it with ibe public Del Ore doing anything, and not to change prices without public consent In the absence of retail ?ncc reform, planned hikes in wholesale prices would require increased state

subsidies ihaiadd to ike financial imbalance Moscow is righting to brmg under control, and tiorba-cbcv has also delayed these increases indefinitely. There is no mystery why he has agreed to this critical policy position: to proceed with price reform at this pant would also haveifficult gamble.and his advisers were deterred by the prospect of having to copecaafctjujfrftat popular re-spon.se to price increases, hoped to buy social peace. IM Convinced themselves that conditioru to move on prices would be more propitious later once financial "stabilization" had been achieved and hyperinflation averted, the monopoly factor dealt with, and other taker

The coals of Dab gamble are likely to be enormous By largely postponing tbe establishment of tbeprerequisite for economically rational decisioei-making^ the gamble blocks workable decentralization, the introduction of genuine wholesale trade, and

3

reliance on financialeffectively ^nming marketi7ation onespective ofailure io deal with wholesale prices will intensify the problems and costs in the future of currently underpriced nonrenewable resourcesenergy andt will also build further irrationality into investment and the stock of fixed capital, imposing still higher economic and social jjfr costs downstream for corrective actions. Subsidies to agriculture will also have lo rise.aajJBB

accelerated convention of defense industry for civilian produciiori,m KWnslungooos production by all branches o! industry,rcversea signals by aceepiing tbe recommendation to initiate incased imports of consumerhope is lhat Ic can "saturate" tbe consumer market, mop up some of tbe huge cash savings of tbe population, eliminate shortages, avert hyperinflation or "barterizalion" of tbe economy, head off popular unrest, and create equilibrium conditions under which it will be possible later io initiate full marketiiation.

the retail side, Gorbachev'! talk about price reform hat been un invitation lo the populat-ion, to increase hoarding of coniumer goods. The longer retail prices are froren. tbe more IM pattern of consumer demand is distorted, ai faulty signalsproducers andf food sales increase, so will food subsidies Most Important, delay may make tbe ultimate problem of dealing with retail prices thai much more intractable: prices that might oaly have had to be doubled, let us say.to be quadrupled Meanwhile, the pcrerr.eni of retail ind wholesale price reform *jl expand corruption throughout the economy, '- pull IC

The Cnub Budget Deficit Redaction. Resource Reallocation, aad Consumption Program lo thehe average annual budget deficit waiuition rubles This figure rose7 billion rublesonillion

illion

growing financial imbalance in the country, the Soviet leaderihip has approved an "crncr-

IQOdS, and snraulmmts. There il dilCUS-inn of financing the deficit, in pan at least, through

the sale of state securities and bonds bearing an interest rateercent. The strategy has also

'ccnuvlued iBtsirofw Ic*Oerceni Ins dun ibtfor IW. and lotwon ol heavy induilry Ihc reduction iictttm

Yet il ii highly likely that deficit reduction will fall far short ol planned Uigeti It be hard lo impose ifffeSllWcMruruitnet and republics, ind there balready through the SupremeMock delay! in the implementation of social programs. Inflation itself will begin feeding back to raise the level of government spend inggains in projected revenues from turnover taxes are based oe unreal.incally high targets for the produciiori of consumer goods, and subsidies forand other consumer goods willajor drain on the budget

t

There are other problems with the "subluxation" formula.ricc-impmed change an the demand side, it is unrealistic to hope thai supply can

catch up with consumerheoard campaignthrough the very "command-edict" methods that Gorbachev says belikely to result in inferior products.

tbe economy. At lhe same time, fear of the economic and political consequencesigher hard currency qjpi, and recognition that imports would have to be far greater to substantially diminish the savingsrc likely to inhibitentral component of financial stabilization. On the investment side, radical, abrupt shift! in proportions hiitoricallyignoring theof different economic

resources and thrown ihe losersailspia. It it not inconceivable lhat the magnitude of cuts projected

in heavy industry couldhain reaction producer-good supply shortages, leadingpirali'ng downturn in production in the economy.^

Selective Structural Rerorm

marketization"

Gorbachev has by no means acknowledged thai his decision on prices and niacroeconomic "subilization" putt economic reform on hold. He talks is if he wishes to move ahead. At the9 plenum of the Central Committee heailed attention to forthcoming discussion by the Supreme Soviet of draftlaws on ownership, land, leasing, republicrights. Ibe local economy, sell-management! ancr taxation. And, in tact, mereorward with implementation of7 Law on the Slate Enterprise and elements of reform preconditions of markctization. such as expansion of enterprise rights in "levels: partial deraiio'nT reduction in the number of pian indicators, absence of" rational prices and other essentialhowever, these steps have the perverse effect of promoting arbitrary or monopolistic price increases

the same time, he has sharply attacked Western-siyle private ownership of the means of production,this withlthough he supports coopcranves, ihe solution to this ideological dilemma, he emphasizes over and over, is the leasing of capital stock and land to produciion collectives. He has in mind noi iust agriculture and services, but large chtinks"of industry. He clearly hopes that leasehold property "ownership" will engender proprietarycombat monopoly, and defeat bureaucraticofavoiding the supposed adverse social consequences of real privatization. In the not too distant future it is quite possible that Gorbachev willig campaign lo shift the

The difficulty with Gorbachev's calculation is that experience in both Eastern Europe and the West suggests thai leascbolding docs noi produceenefits as private ownership, although in r ituations the results may be useful

for creationrue capital market, with the sale and purchase of

Gorbachev initiative with serious long-termhas been the fostering of new forms ofand management of production units. Gorba-

chev believes lhat the establishment of proprietary interestasic key to economic revitalizauon and that this condition cannot be achieved under the present depersonalized state ownership of the means of production. Thus he it pushing strongly forof the proposition thai "various" forms of ownership are legitimate underet. at

Gorbachev recognizes these problems and mg as an ideologically defensible "cc-

been complemented by hedging in his defense oi cooperatives. By miking ihese politically convenient accommodations to the dominant colleciivisiof Soviet cliiet and the population,ime in which lhe absence of legally regjiurd markets isrowing cofruption throughout thesector of Iheeconomy.antg strong impulses thai exist lo reassert 'adminisira-live" controls over the economy]

The colleciivisi predicament carries over into lhe sphere of management. Gorbachev has vigorously supportedhe election Ol mamgers.eans ol breakingto ftreiirotkTa within the bureaucracy and overcoming alienation and apathy among ihe worke principle of clectivity of managers was codified in ihc Law on Stale Enterprises, adopted inn combination with collective leasehold-ing. however, workplaceuldaitingSo-iei

nion on ihegosTaTpaib. It -ill prooapls diseour-age investment b> enterprises, encourage unjustified wage increases, make ii harder to broaden wage differentials, strengthen pressures to continueenterprises operatingoss, and promote [Jp flaiion .JJ^U

Political Reform Gambles

Drawing on the experience of earlier economic reform efforts. Gorbachev has ir card thai economic reform will (ail unless itnderpinned by political retorm7 he has promoted politEcaT gey lopereiiroyka. Hu aim it to replace the tl Stalinist system of political power with an entirely new structure that is less centralized, moremore open to tbe unreiirscied flow of political ideas and irtfonruUion.onst,tuccrjlued" through fundamental law, and more protective of ihc citizen's civil liberties. Tbe key changes are those affecting the demarcation of functions and power between the anfvariiijtihr nnruifrlv elected soviet*.

"apparatus"-

through bureaus selected co-oputivcly ai all levels of the party, representatives of the system's key(the economic hierarchy, the sovieis. the security organs,party's ownhave decided policy. In this system the pariy

itself routinely :ials

the central level, the key

hrough theBelow tr

function actually performed by the party apparatus

bureaucracies, li has also controlled tl [VOCCSS of personnel appointments to all leadership posU Ifl Hi inllillilions, whether these pons are appointive or nominally' menklatura system

a ui'

tc or wm

converts for policy, lu most important role in this respect has been io cope with inconsistencies between enterprise produclion targets and available inputs caused by iDeoberem economic plans (This is why top positions in the party apparatus, ai least in ihc Russian flepu ave generally bee" staffed withhe teal role of tbe army of "ideological" functionaries in the party has been not so much to argue the party's position and build parlyas io communicate what the partyition mm various issues The problem of party "authority" unnt recently was not particularlybecause there was no political compciitition.plc were'Prepared lo challenge Ihe parly line, and those who did were bandiedf

Gorbachev appears to befaeve that the party ihouldo lKTf|Me IM cJltlFP ScXtf IPet-form us vanguard role j. He Das an altogethervision, however, of bow this function is to be performed. In histbe party should abandon its de facto executive and legislative acllVITV.'H sTfoTTTd:

and other

; to all other

rganizattons.

Curtail dictation of personnelthrough ine nomenklatura system.

Remove itself from day-to-day involvement in the economiepjans.

its aegis, acting more or less collcgially

Traroforsnatiori of tb* Communist Party jh^Jjjmmu

has provided thr yniral mechanism of politicalUnder it

6

Seoret

ihe tame lime, ihc party should strengthen iu "political" role by:

rim trust ji .ill levels to generate appropriate macropohcics

Winning authority for the party and lis line by force of persuasion in the emerging competitive political arena.

Influencing elections and personnel appointments in all institutions by cultivating and presenting the -pest" candidates

lhe intcresit of all strata of the population through broad external dialogue and iptemal party democraiiiaiion gjpjjaj

Gorbachev is, in fact, attempting to implement this model He has weakened the Central Committee Secretariat and may be reaching ppIic) decisions in an informal group outside the Politburo. He hatthe branch economic departments in theorganizational base for day-ic-day party intervention in the economy He has ordered party officials to exert influence through persuasion rather than command lie tut lUlcTfc IT.tsystem as prone io error ind ihe perpetuation of mediocrity. He is urging pans leaders aib not io wan for instructions from above but to develop their own "actione is demanding that all party officials emulate hit own example and carry lhe case for perturoyka to the population through the mass media. He is promoting tomrxliiivcclcciions within the party. And he it instigating personnel cuts in tbe pany apparatusarge-scale turnover of party cadres, to which he attaches great significance.

Eisentially, Gorbachev't program implies theti* the CPSU as ii has timed and thecrcaiionof aa organtation that isin it" functions, structure, personnel, and relationships with wneTparaoTThe-Soviel system. Through thu transformation tbe party is io regain both the will and the legitimacy to rule-Wereeumorpbostsucceed, it could in principle create an integrating vehicle compatible with democratized tovicu aad other electiveIt would alto dear away resistance ia lhe party apparatus toafSSSSSj

The odds against the desired transformaiion of the party, nonetheless, are formidable Exhortation to exert influence through persuasion it unlikely to give ihe pany enough moral authority to compensate for km of the operational power to issue orders aad dictate personnel appointments. It is Questionable whether purging the party apparatus will increase its ability to operaleompetitive politicalas much at Gorbachev seems to hope. Pravda complained editorially in June thairmsider^bfe pari of the pariy apparatus is in total disarray and is unable to find its bearings in the newnd it it difficult to identify, beyond presumed psychic rewards, wbit ihc payoffs are to bc that will motivate party officials. Rather, tbe odds teem much higher that Gorbachev's strategy will simply undermine the real-life CPSU weaken its ability to bring orderuil nonmarketized economy, increase uncertainty as to its role, further demoralize both cadres and rank-and-file members, and intensify ihe already high levelanger of tru appaiatusiQwarTrj11BBB

Empowering Democratized Soviets

Gorbachev is banking heavily on the Soviets being

able iniirr<'>t-i! ire

nevertheless liidancc.

it redefinition of iJsepajTy*srole. What he seeksechanism, that en toy*Jeauimacv. is sensitive to [>

Deputies and formation oi the Supreme Soviet, the first meeting of the Congress in June and subsequent session of tbe Supreme Soviet, and the upcoming elections to local towels 'he fall. Gorbachev hasSoviet ponticsromising but perilous path

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

jfc-

Step

system established in ihe USSR- Publicly, he hasriticized advocacy of multiparty ism in the Sovietthat this would multiply cleavages in an already "complex" society and. mosi important, would promote ethnic strife. In thishe would be aware lhat his invitation lo informal groups to participate in parliamentary politics could leadhe formation of other parties, as Nikolay Ryzhkov and others have warned, but planned to maintain the CPSL's preponderant rote by somehow taming or co-opting the main opposition groups.)

IS

'.he emergenceew corrr> nl middlc-cLi%*ihc frank discussion nf iptmc^ uoot:role of deputies in hcJpinge theand ihe rejection of someffounds lu' hut*.puhucizairon of lhe Soviel population, lhepublic needs, and the radicals, non ofby iherowing number otwill impose severe strains in these newTolerance and compromise jre not >ct panelectorate

the meantime, as Ryzhkov has also observed, the creation of the new activist Supreme Sovjet, fjeaaed by Gorbachev introduces an element of proionad ambi-distribution of power andouthority TPgu.CentnUoviel, and the Council of Ministers at

the'

lion may emerge. The new institutions currently lack most of the operational attributes of functioning democratic parliaments that help them to conduct business and deal with suchnrcssures. and these can develop only wilh time.

top of

or lhe new deputies. Political cocrpeiiiion in this arena, contraryorbachev's calculations, may work against the establishment of market socialism. Confllcti generated over ethnic issues will be bitter. A

formed at all lower

arc held and

levels, this

Whether multipany political competition will emerge as ihe new soviels evolveritical issue Wiinlhe formation of the "Interregional Group of depones, ihe collective action of Baltic deputies, and the cou-

cusing of "workers'rganized oppositionready arpveqSynrcm, hnnrt. Some" participants in these groups visualize ihe rapidof multipany politics. And several groups oui-

alreadyjjrganizing as political do sol

stageeneralized "consiiiulionar crisis, large numbers of partyaries arc likely to be defeated in these elections. Toxtent inai eieclion by ine pouuiacc to triesoviet is seenecessary validationarty secretary's tenure of office, fbslitical reform will sharply heighten anxiety and promote cleavage within lhe party apparatus. Gorbachev probably hopes tohe crisis resulting from elections to the Soviets to redefine formally, both constitutionally and through revision of the party rules, tbe division of labor and respective powers of panv, stale, and government

is conceivable that Gorbachev privately welcomes the prospective emergence of multiparty competitionong-term stabilizer of the USSR's new mass politics- In ihis scenario, he might hope simply to preserve Ihe Communist Pany's de jure monopoly long enough lo effect the transfer of real power from the CPSU io lhe Supreme Soviel, at which poini traditionalists in the party would bc unable to prevent recognitionultiparty fail accompli, ll is more likely, however,he told Hungarian leaders Nyers and Grosz injs prepared to accept multipany politics inJjuggiQ but docs noi want such

Imp Ileal loos Stability

Gorbachev's visioniberal Communist future seeks to reconcile satisfaction of ethnic demands with preservalion of the Soviet multinational slate,introduction of marketization withnd democratization with maintenance of thePany's "vanguardjfinimiTjpf- tilty^-shed his been central to his tactics. Hb desire to avoid

Stjrfei

confrontation with ihc population and tooliikal" solutions to problems i> reflected in hit encouragement of polmciration of the population and tclerar.ee of social turbulence, his readiness tohostility toward the Communist Party aod the Sonet systemroduct simply of failure by the regime to eradicate pasthis 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 pres-

Thcse qualities are reflected in the gambles discussed in this paper, which in turn are generatingroblems:

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

In lbc_fconpmif arena. Gorbachev's gamble on postponement of pricerash consumption program, and selective pursuit of certain structural changes has placed real rnarkctizatioa on bold, mortgaged its introductioninancialprogram that is more likely than not to fail, possibly compromised its eventual success with strictures against private economic activity, aod set tbe stage for continued corruption and protracted ecwjomiccrisjs

In the political arena. Gorbachev's gamble onthe Communist Party along linesno parallel in single-party (orelsewhere is seriously weakening themechanism for societal integration inwhile the gamble on institutingthrough tbe Soviets is likely tonew strains on theh

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 set of probkms Gorbachev has in fanikely to lead in the foreseeable future to major instability in the USSR.^MJ

So far. neither the rioting, nor the communal violence, nor the demonstrations that have occurred in the non-Russian republics have compelled Gorbachev to resort to more than limited doses of armed repression. The most violent conflicts have largcly_not involved natives versus Russians. However, with the escalation of ethnic assertiveness generallyhe radical-(ration 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 Ihe backlash of large numbers of Russians living in the borderlands lo native aUcrnpb lo assure prtflfliyhe local language, residency rrxjurreroenu" for politi-cal partiapauonran^pTogress toward autonomy or evenars now displayed among Russians in the Baltic republics and Moldaviaead 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 settler-instigated conflict, native assertiveness is likely to precipitatewith tbe Center, however self-disciplined the non-Russians may be. One factor that could lead tolash might be Moscow's'(

relaxation of controls in theB.il':'-recedent for the Ukrain

Gorbachev has sought to replace Brezhnev's tacit understanding with the population, which essentiallyuaranteed minimum "living standard and social security benefits in return forsivity.

e

greater economic in c

security, nut his economic generate tbe sustained growth in material rewards necessary to supportransition. At best, tbe policy willeteriorating situation; if it fails, the result could be hyperinflation and tbe emergencearter economy. And the policy still leaves the economytate of protracted vulnerability to at least three generators of an economic downturn that

Sej/et

further enhance the likelihood of street politics: the 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 mayor concessions to the miners that will increase lhe deficit and may well encourage more groups to use ultimatum polities.

"^HgtaBBBBaBBaBBaaananananatttuanaW "

mittees in the Donbass virtually controlled the mining

towns, meeting with no resistance from the local party structures. Heady from their success, organisedarc spearheading formationass laborwhich might develop widespread support among worlers who want the security of the old social contract asrrcstroyka promt-

Glasnosi, tbe evaporation of fear of authority, and Gorbachev's attempt to mobilize popular pressure against bureaucratic vested interestswith consumer dissatisfaction and diffuseanger toward thelatent impulses and energized political moods at the base of Soviet society. The old "iraasmissmr. belts" npr cially the trade unions andthe "masses" with the regime have, in the new

becc^rw incrwingly*Tr7Be-

to the Congress of People's Deputies

revealed how little confidence the party apparatus iiseir enjoys among me population at large, oorba-cdev's gamble on radically restructuring Sovietinstitution* is further weakening the oldthat repressed popular

Opinion polls and abundant evidence from other sources suggest that the public's priority concernhe standard ot living To trie extent that sovieu act as

vehicles for absorbing mass unrest, tbey are hkely to press for welfare spending.increases, subsidies fcr unprofitableelaynd otner measures itut will increase lhe difficulty of moving toward effective martr-tiMiinn InihuMire. the phasing^ in of political reform before economic refcen^rnaj^bavc severe long-term costs.

Bui political competition encouraged by reform is giving voice to other concerns as well: about public order, crime, kns of control in the borderlands,destruction, erosion of traditional values.

natives. This "of grievances could, under conditions of continuing consumer deprivation, lead to outbreaks of anarchic violence orocial base lor attempts by political clues io reverse Gorbachev's jicies.j

Political Outcomes

Gorbachev's gamblerotracted transition to marketization. unless modified, is likely to delay serious economic revitalization indefinitely and create conditions of chronic instability irrespective of lhe destabilizing impact of ethnic conflict. Under theseoverning the Soviet Union will become jit. Yet the frag mental ion ofway will probably" the party, divisions now visible pitting natives against Russians within the republics, republic pany organizations against other republic party organizations and against the Center. RSFSR oblast party organizations against the Centralapparatus, and liberal against traditionalist factions, will expand. Andersonalwithin tbe party and among the population at large will probably continue to decline, dcspiie his political victory at the September plenum of tbe Central Committee.|H

Some observers have speculated thai anarchy will be the end result of these developments. Ihis isTnighly flnlfKely outcome: il "anarchy" Ooea occur, it wtU simply mark the transition from one set of political arrangements to another. What is likely is that insta-bility will force tbe Soviet leadership to choose (rem

to personnel purges, "io police or mUitary ag-

to declaration of states of non of mamal law. Choices here

. ranging irom stron-

10

will hinge partly on how threateningegimeconditions of insiabiluv are judged lo be. partly on hew effective, in suppressing disorder given types of crackdown are predicted to be. and partly on how counterproductive the crackdown measures areTeld to be in terms of frustrating attainment of other key objectives,

The record suggests that Gorbachevigh tolerance for disorder, will seek as long as possible to find compromise solutions, and. when decisive action becomes necessary, will attempt to select measures at the lower end of the crackdown scale. He seems to fear that bloodshed resultingrackdown would seriously exacerbate conflict situations; he probably has not been impressed by the efn'cacy of force applied in Central Asia and the Caucasus; and he must fear the consequences for perestroyka and his foreign policyroad and extended resort'to armedttttttttjrj

Converging evidence suggests that there are strong

"in

declared thathreat to the safety and lifearises, we will move decisively using iheof Soviele also observed, withNagorno-Karabakh, that "we stand before thetake resolute measures: we cannotfl

Yet it is highly doubtful that Gorbachev would abandon his reform program and his natural consiilu-ency by sanctioning indiscriminate violence, or engageid to seize dictatorial power through an alliance with bis political enemies. It is possible, however, that he might choose to resign rather thanrackdownr.aior.imposition ol martial law, in bis conversation with thenoted above. Gorbachev seemed to imply that he would have resigned rather than order force to be used against the strikers. And be appeared to beimilar hintpeech he delivered more recently in Leningrad. Naturally, he could also justify retaining office (if he were indeed inclined io resigni on "lesser evil" grounds.afaHB

dealing with insia:

major escalation of repression, especially if it involved the imposition of martial law, could welljose tbe question of who should lead the USSR. Currently there is much speculation in Moscow aboui martial law. the acquisition by Gorbachev of unrestrained power, coups, and mililary ukeovers. Gorbachev might be inclined toroad view of his prerogatives as head of state, and perhaps even cxer-cue limited emergency powers in an effort toeristroyka. He would be wining to escalate coercion somewhataintain order and isolate nationalist or other't the9 plenum of the Centra] Committee be condemned "extremist rallies that provoke imerctbnic clashes and terrorize and intimidate people of other nationsnd

In the event that Gorbachev remains in power, his rcson to force is likely to be limited, and instability wnl not easily deflect processes that appear to be heading toward lurther Ocmocraiir^tion of theorder, some lorm of multipanyism.r. in the Baltic case,reakup) of the SovTet multinationalGorbachev can avoid sharp political polarization 3nd achieve some reinstituiionalization of political integration through the sovieis. If there is financial stabilization and marketization. there might be high instability in the near term (two to five years)ourse could be set towardoears) socialWithout financial stabilization and marketization (which arc now in serious leonarovi. there would be rising instability in tbe near-to-mcdium term, high instability in the long term, and likely movement of

Secret

irend toward Ubcraliiation and imperialis perceivedlear and present danger by some members of Ihc Soviet politicalo arc shocked by what they perceivereakdown SC

social discipline and loss of regime.control. Their

anxiety, fear, and anger could still crysiiluc in an attempted coup, legal removal of Gorbachev, or even assassination Judging by what is beint said publicly by Gorbachev's critics in tbe ould not behrowback to ihe BrctTincvtd accept the need for significant change, including reductions in defense spc'ntfing and decentralization of managemcnUlbut would attempt to "draw the line" in manydemoc-

, the media, the

is seen as outrageous. Although tbe odds areraditionalist icgime would increase restrictions on private entrepreneurial activity and market nation, it is not altogetheronVho waseadership rvgji take advantage of limiu on public expression lo move forward vigorously with mjrkemattoo Barring thb slim possibility, the prognosis loregime would be near-term stability but high medium- to long-term instability, leading to Ottomanization or upheaval from belowtjfj

caisramong manyl"*THfy|luTTorreacTsonary restoration, however, would solve neither the economic problems nor the nationality problems, and thuserpetuaterepressed if not open. gSaS

Implications for lhe United Suits

Under any scenario, economic tensions, acutedissslisfaction. labor unrest, and ethnicguarantee lhat the United Stales willoviet leadership mat ucesinsupiiiiTTTftcTBances thaisignificantly reduce the potential for instabilityforeseeable future are low, and are eeruinlyihe chances ihai Gorbachev's own gamblescontinuing ccooocik stagnation or decline.will maneuver to dampen instabilityand to avoid armed confrontationHe may muddle through moreappears likely. But the odds are greatih.siconflict will-six months--create strong the leadership to crack downthan il has to date. Gorbachev may wellWiSk icpteision in order to retain power Itin this context, thai an alternative leaderonly initiate more brutal repression thanmight, bul would cite instability as thea general atlack on Gorbachev's political reforms.

The length of Gorbachev'sn important yanabje. in toe eveni tnai he is not soon ovcriniown. his gambles on ethnic and political reform are likely lo increase the social forces of resistance to an onhodoi reaction.evelopment 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 ciemenu of lhe working-class population io back iheir cause. Political maneuvering

movement is

Reac-

lanes would espouse neofascist slogans designed to Up into the ami-intellectual. anti-Semitic, anticaoi-talist. xenophobic, Russian nationalist moods that also

Moscow's preoccup.ilion *nh instability is likely for lhe foreseeableregardless ol othertoeturn to the arsenal state economy that

ihreat to ifac JI. The Soviet internal order in tbe USSR will

flnr ffrnmrunii aagp^

regional instability in Eastern Eur

arrangements of some kind and confroniirii tbe Uniled Slates with severe foreign policy and strategic challcngesT lnsta-bility in Ihe LS^Jk will increase uncertainty inest about proper policies to pursue toward Moscow, reflecting nervousness about Soviet developments but nonchalance about defense, and will impose stress on domestic and alliance decuionmaking.Bknnl

12

To cope wilh ihe crises ihai promote instability, Gorbachev needsransfer more resources from militaryonsumerersonal stand-point, he needs to defend himself against charges ihai

IK

seduced by praise from ihe "class" enemy _

n-M, demonstrable fsulis from ihe arms'ialks ibai wjjl permit himrgue ih.it ihe external "threat" has receded even further. Likewise, he needs trade and technology iransTer from the Westvercome bottlenecks in lhe Sov ei economy Obviously, he does not need Western act ons lhat call into question the efficacy of "New Thinking" in foreign policy, or thai could bc 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) .lhat confront himlheest. But Ihe 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 mililary spending and to reinvigoration of an expansionist foreignwhich, as argued above, will be strongly inhibited in any event by the insistent demands of consumption and the civilian sector. This process, andiliiantly reactionary restoration that might attempt to bringasic shift in the Soviet Union's foreign posture, benefits greatly from each year's prolongation of Gorbachev's

A key weakness in Gorbachev's strategy lhat will perpetuate instability is iu hes-naifl nrmroach lo mar-ketization and its unwillingnessace un to the necessity of i

il nrivaiiraiion of ownershin of

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 torackdown of some sort in ihe ethnicnot in response to communal violence, but in the form of intervention to suppress Russian/native clashes or the drive of non-Russians for greater autonomy.rackdown is most likely in the Baltic region but could also come in the Caucasus. Moldavia,thethe Ukraine. JkWm} .

Gorbachev has said he wants tn create astructured federative union based on the consent

' the constituent republics. Movement away from heretofore existing situation towardoal would in general 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 within the elite for such an outcome; yet this is precisely what acceptance of lhe more radical Baltic demands would imply. The new draft CPSU platform on nationality policy hints ategionally differentiated approach to Soviet federalism. It is possible that Gorbachev may be

TtJc

^for

evolution toward still greateride range of configurations of "autonomy" or "Independence" ts conceivable, inontext lhe Soviets might be interested ai some point in discussing withtheir regional security concerns, which would probably bear heavily onecision. jMH

private sector in lhe

13

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