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The USSR: Twenty Years Later

Posted on the 14 December 2011 by Center For International Private Enterprise @CIPEglobal
Gorbachev announces his resignation

December 25, 1991: Mikhail Gorbachev announces his resignation as President of the USSR. (ITAR-TASS)

The end of December marks the 20-year anniversary of one of the most momentous political events of the 20th century. The collapse of the Soviet Union shocked outside observers and revolutionized international politics, ending the Cold War rivalry and leaving behind 15 independent states. However, the aftermath of its breakup is as notable for its social and economic consequences as its geopolitical ones.

After the Fall: 20 Years of Post-Soviet Reform
Twenty years on, it is important to reflect on both the progress that has been made and on the opportunities for the future – not to mention the challenges that have been faced along the way, and those that lie ahead. The transition from a one-party state and a command economy to a system based on free markets and democracy has not been easy. The extent of the economic dislocation alone is hard to overstate: the breakup of the Soviet Union resulted in the largest peacetime economic decline in human history, in absolute terms, and some successor states are only just returning to the levels of prosperity they saw in the late 1980s.

However, in recent years the economic picture has been looking much better in the former Soviet countries. As Daniel Treisman noted at a recent event at George Washington University’s Elliott School of International Affairs, macroeconomic indicators in the former Soviet bloc, including inflation, unemployment, trade, and the overall structure of the economy, have gradually converged with global averages (or at least with those of other countries at a similar level of development).

Treisman’s fellow panelist Pauline Jones Luong also pointed to research suggesting that fears of a “resource curse” for oil and gas-rich post-Soviet countries were largely unfounded: these countries have not fared much differently than their peers, and do not appear to be in thrall to the kinds of bad governance and economic dislocation that plague many other resource-dependent economies.

In short, after a long and difficult adjustment, many Soviet successor countries are now beginning to adapt to today’s post-industrial, knowledge-based global economy. However, the big macroeconomic stories can hide significant and growing inequities within countries. Like any major socioeconomic change, the transition to democracy and capitalism has produced both winners and losers. In many post-Soviet countries, the too-hasty privatizations and unregulated “casino capitalism” of the early 1990s have left a sour taste, as the “winners” were perceived to be mostly criminals and corrupt politicians.

As a result, polls now worryingly suggest that the citizens of ex-communist countries may be losing patience with the reform effort. A recent Pew survey, for example, shows that support for the change to a market economy has dropped considerably in Lithuania, Ukraine, and Russia, the three countries surveyed. The decline in support for multiparty democracy was even more precipitous: while respondents in these countries were overwhelmingly in favor of democracy in 1991, today only bare majorities in Lithuania and Russia, and just 35% in Ukraine, support the change.

Still, there is room for hope. The Pew report notes that there is a “democracy gap” in Eastern Europe, between what the public in these countries sees as the benefits of a fair judiciary, honest elections, and basic civil liberties, and how democracy actually works in the region. “Majorities consistently said it was important to live in a country that had these key democratic institutions and values, and large numbers believed most of these features were very important,” the report notes. “However, considerably fewer thought their countries actually had these democratic institutions and freedoms.”

Andrew Barnes, another panelist at the Elliott School event, argued that the key question now is what happens to the “first round winners,” those who profited and gained positions of power during the last two decades. Only strong democratic institutions and a continued commitment to reform can prevent the current generation of oligarchs from becoming a permanent, predatory elite. Partial reform only increases the chance of state capture and backsliding into a less inclusive, less participatory political system.

Seventy million people have been born in the former Soviet countries since 1991, and though they were never citizens of the USSR, their lives are still profoundly shaped by the transition away from communism. It is up to this generation to continue the reforms set in motion by their parents and grandparents if their children are going to live in countries where opportunity is based on talent and hard work rather than political connections, and where the voices of citizens are heard at every level of government.

Over the next two weeks, the CIPE Development Blog will present a series of perspectives on what the last 20 years have meant for the countries of the former Soviet Union, and what still needs to be done. As Gorbachev himself put it in his final speech before stepping down as president of the USSR, “We have paid with all our history and tragic experience for these democratic achievements, and they are not to be abandoned, whatever the circumstances, and whatever the pretexts. Otherwise, all our hopes for the best will be buried.”

Whatever one’s thoughts about the man who said them, those words remain true today.

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