Russian Privitization

Russian Privatization

As with most major changes, the liberalization of the Russian economy has suffered setbacks in its continued course toward privatization. It is worthwhile to note that the path toward capitalism from a controlled economy has been rapid given the size of the economy and accompanying political and legal changes. This paper discusses the changes in the legal, political, and economic systems that culminated in the privatization of the oil industry and the subsequent Khodorkovsky and Yukos scandals. While similar case studies can be conducted in other industries or companies within Russia, Yukos provides a well documented and commentated upon.

The Development of Democracy in Russia

While the transformation from the communist system to a capital system, to couch the change in economic terms, was largely bloodless. However, the changes that took place to create the communist system was not so humane. The transformation from autocratic to democratic, when viewed from the perspective of Russia's origins, is awesome.

Russia's Political Origins

Until the early twentieth century Russians had very little experience of parliamentary institutions, having lived under a more or less autocratic monarchy for most of their history. Medieval Novgorod had a citizens' assembly and "assemblies of the lands" were occasionally summoned until the seventeenth century. The last of these brought the "time of troubles" to a close by selecting Mikhail Romanov to be tsar, but his successors in the Romanov dynasty showed little interest in consulting the wider populace thereafter. The development of a multi-ethnic and often unruly Russian Empire during the eighteenth and nineteenth centuries further reinforced the habit of autocracy.

After the limited reforms of the 1860's a system of elected regional assemblies with a very limited franchise was introduced to supervise schools and other local institutions in the mainly Russian-speaking parts of the Empire. Liberal intellectuals hoped that the reforms of the 1860s and 1870s might be crowned by the introduction of a constitution with democratic features, but the growth of radical opposition to the tsarist system and the assassination of Alexander II in 1881 led instead to a period of even more autocratic rule by his son, Alexander III.

In any case, the parliamentary institutions of Western Europe tended to be held in low esteem in Russia by intellectuals of both the right and left and few believed that anything similar could or should be introduced in the Russian Empire. One of Alexander III's leading ministers, Konstantin Pobedonostsev, described parliaments in general as "the great lie of our times".

The Russian Constitution of 1905

A constitutional parliament was introduced for the first time in Russia in 1905 in response to the widespread unrest which followed the defeat of Russia in its brief war with Japan. Like the lower chamber created under the 1993 constitution, it was known as the Duma, which in Russian suggests a body devoted to reflection and advice, and was conceived by reformist ministers as a modernizing institution in the framework of a constitutionally limited monarchy. The first and second Dumas were dissolved because it seemed impossible for them to find common ground with the tsar and his advisors. The third Duma, elected in 1907, had been manipulated to produce a reliable "moderate" majority, but again the constitutional experiment failed as the tsar became impatient with having to seek the views of parliament and even the "moderates" were soon forced into opposition.

During the upheavals of 1917 the workers' and soldiers' "soviets" (literally "councils", in this case elected by public meetings at the workplace or barracks), which had first been created in 1905, reappeared and began to challenge the authority of the provisional government. The Bolsheviks used them first as a springboard to power and then as a substitute for more conventionally elected bodies. They regarded western-style parliaments as inherently corrupt and bourgeois, but they were also aware that it was easier to secure the endorsement of Bolshevik candidates through a system of Soviets than, for example, through the elections for a Constituent Assembly in which their agrarian socialist rivals, the Socialist Revolutionaries, scored much better. In due course the Soviets were built into the constitution and gave their name to the new federal state which replaced the Russian Empire. In theory they represented a form of "direct democracy", but in practice real power was exercised throughout the communist period by the highly centralized Communist Party of the Soviet Union (CPSU) which maintained a firm grip on nominations and elections to the Soviets at all levels. The USSR Supreme Soviet, theoretically the Union parliament, met for only a few days each year to hear long speeches by the party leaders and provide ritualized unanimous votes of approval. For the rest of the year the Supreme Soviet gave full powers to its Presidium, the chairman of which acted as head of state. From 1977 this post was combined with that of General Secretary of the CPSU.

The CPSU also had a "Parliament" of sorts, in the form of the Central Committee. This brought together the key officials of the CPSU central apparatus, along with all the republican and regional chiefs, senior party members holding posts in the army, the KGB, academic and cultural organizations, and a leavening of token women, workers, farmers etc. Once again, election to the Central Committee (formally from the occasional party congresses) was tightly controlled from the centre, but it did sometimes serve as a forum for carefully coded discussion of problems and priorities. Opinion within the Central Committee could become significant at times of leadership transition, such as in 1964 when members of the Politburo conspired to oust Khrushchev from the post of First Secretary.

Mikhail Gorbachov's Influence Ð'- Perestroika

Neither the USSR Supreme Soviet nor the CPSU Central Committee provided Russian society with any experience of electoral politics, of frank parliamentary debate, of deliberative law-making or financial accountability. Consequently, when Mikhail Gorbachev decided in 1988-89 to create a working parliament as an engine of reform, following years of inaction by elderly communist party leaders, there was virtually nothing to build on. Moreover, unless the role of the CPSU and Gorbachev's own authority