The Wild East

New Internationalist 366 — April 2004

The Wild East

Life in the highrise jungle of urban post-communism is not for the
fainthearted. Richard Swift takes the measure of a new capitalism – that’s
all shock and no therapy.

THEY are mostly apartmentdwellers, these sceptical survivors who have lived
for decades under communism. If you are lucky enough to be invited into
their homes, their hospitality is exemplary. Scarce food and drink flow with
unparalleled generosity. While they have memories and often connections back
to a village somewhere, their life and fate these days is decidedly urban.

Housing is a huge problem for them. Overcrowding is the norm. Privacy is at
a premium. Whoever can buy an apartment, does so. For most, a single-family
dwelling is inconceivable. Young marrieds have to stay with their family –
maybe even share a room with a sibling or two. But at its best there is a
warmth and cosiness to this kind of apartment living. It could be in an
older downtown building with some residual charm. More likely it is in some
kind of Soviet-era monstrosity on the outskirts of town. Whether in an
Eastern European city like Sofia or the capital of a former Soviet republic
like Tashkent – whether in the architectural wonder of Lviv in the western
Ukraine or Tbilisi in the far reaches of the Georgian Caucasus –
postcommunist people are taking great care and pride ‘doing up’ their often
cramped home interiors.

Meanwhile, the public realm outside their doors often festers with neglect.
Corridors, elevators and stairwells are festooned with garbage and graffiti.
Social certainties like guaranteed apartments are simply disappearing. So
too are secure jobs, pensions, free (if inadequate) education and
healthcare, affordable (if uninspiring) food, access to recreation.
Postcommunist economies are being ‘reformed’: marketized and privatized in
ways suggested by Western consultants paid for by the World Bank or USAID.

This destruction is intended. The views of just one US economist sums up the
Washington Consensus: ‘Any reform must be disruptive on an historically
unprecedented scale. An entire world must be discarded, including all its
economic and most of its social and political institutions.’1 The aim is to
create Middle America on the Volga. ‘From each according to their ability,
to each according to their need’ gives way to ‘if you can’t make money from
it, then don’t do it’.

Not that most people were happy with communism. But with communism’s
collapse, they were promised more democracy. Instead they are getting
political bosses and fixed elections. If the economy had to be reformed,
they wanted more opportunity. Instead they are getting oligarchy and

The champions of the unfettered market call it ‘creative destruction’, a
phrase that comes from the conservative economic historian Joseph Schumpeter
who saw it as ‘the essential fact about capitalism.’2 And for the people in
what used to be the communist world there has been destruction aplenty.
Destruction of jobs. Destruction of living standards. Destruction of entire
industries. Destruction of health. Destruction of lives.

Life expectancy is down. Suicides are up. So are alcoholism, drug abuse,
prostitution and crime as people try desperately to cope. The severity of
this crisis varies. The formerly communist countries of Eastern Europe and
the tiny Baltic republics seem to have coped best with the changes. But even
here (see the articles on Hungary and Romania) people are scrambling just to

Economic shock therapy

Hardest hit have been most of the countries that used to make up the Union
of Soviet Socialist Republics (USSR). Outside the glitzy downtowns of cities
like St Petersburg, Kiev or Yerevan where the few prosperous New Russians,
New Ukrainians or New Armenians gather, poverty has reached staggering
proportions. Between 1990 and 1999 the number of people living on two
dollars a day or less more than tripled.3 Back in 1989, 14 million people in
the USSR lived in poverty. Nine years later the number had skyrocketed to
147 million. This region has undergone a depression and demodernization
unprecedented in peacetime over the last century. One Russian scholar
estimates the destruction to be equivalent to a ‘medium-level nuclear attack

The creative part of this ‘creative destruction’ is a bit more elusive.
Certainly it takes a certain creativity to survive as an entire way of life
gives way under your feet – as all that is solid melts. But creativity in
the sense that Schumpeter meant – the profit in the market ledger – has in
this part of the post-communist world been, by and large, an export
industry. A lot of the loot from entrepreneurial pillage is now stored in
offshore bank accounts or invested in villas in locations like the French
Riviera. Two billion dollars a month was spirited out of Russia alone under
the corrupt Yeltsin regime. Even the capital that stays in the
post-communist world is mostly devoted to speculative purposes or high-end
retail – night clubs, fancy cafés, glitzy shops beyond the imagination of
most people. Russians were so disgusted with the corruption and chaos under
Yeltsin that, for some at least, the autocratic order of Putin and his new
cabinet comes as a relief.

It’s capitalist utopia these days – everything is up for sale. That’s
certainly the impression that my colleague Andrew Kokotka (the designer of
this issue) and I got as we travelled through the former Soviet Union.
People trotted out their worldly goods in the weak sunshine of a Kiev
afternoon and spread them out on blankets. Or maybe it was from the trunk of
their car beside the river in Tbilisi in Georgia. Every electricity pole was
covered with tear-off posters for all manner of goods and services. A
middle-aged woman named Astghik approached us on the streets of the Armenian
capital, Yerevan, with a plastic bag full of necklaces that she maintained
would keep our blood pressure in check – absolutely necessary when
experiencing ‘creative destruction’. Astghik needed the money so she could
pay her children’s (poorly paid) teachers extra so they would not ignore her
kids in school. Yes, classroom attention has become a commodity too.

So has medical care. Armenian friends described how a doctor told them their
young son ‘looks fine now but next week he might be dead’ as she tried to
convince them he suffered from salmonella poisoning. After all, treating
salmonella (whether you have it or not) is a lot more lucrative than taking
care of a simple case of stomach flu. If you pass your exams and want to
graduate – a little something for the principal will be in order. If you are
in the army and due your leave, your commanding officer has his hand out. Or
say you need a passport or another of the myriad documents necessary to
manoeuvre through life. What are often taken for granted as simple rights in
the West have become ‘negotiable exchanges’ in this part of the world.

No match for bourgeois decadence

Communism was always supposed to be about the future, but somehow it always
felt more like the past. Whether it was old ladies with headscarves and
stick brooms sweeping out Red Square or the denunciations of everyone from
Kafka to the Rolling Stones for ‘bourgeois decadence’, one got the sense of
a world run by a bunch of old fogies. Their values were mostly small ‘c’
conservative – go slow, be stable and predictable, don’t rock the boat.
Sure, there were the early days of real revolutionary fervour and debate.
Then came social engineering on a grand scale: Stalin’s forced march
collectivization The champions of the unfettered market call it ‘creative
destruction’ and industrialization and Mao’s Great Leap Forward and Cultural
Revolution resulted in the death of millions. But this kind of brutal
radicalism (more akin, some would claim, to fascism) gave way to a plodding
system where crimes and dysfunctions leant more toward the predictable and
irritating. You knew what you could get away with and what was dangerous.
Injustice and oppression abounded, but the system provided a certain level
of welfare for those who lived under it. Resignation gradually replaced

The myth of the system’s radicalism was sustained by both those who
controlled it and its enemies in the West. For the former it provided proud
credentials for their ‘scientific’ rule. For the latter it proved that no
alternative to corporate power was desirable.

Still, it was a way of life to which people adapted with a shrug of the
shoulder and a wicked joke at the expense of communist pretension. In the
West much concern was expressed about the sad fate of those living under the
communist yoke. Oddly there is no such outcry now. Instead those pushed to
the margins of mere existence are fed with ‘ no pain, no gain’ sermons about
‘ staying the course’ of reform. The main concern of the free-enterprise
zealots has not been the suffering but rather the fear that post-communist
politicians would shrink from administering the necessary policies to create
a viable capitalism.

The politics of convenience has replaced the concerns about human rights
violations that marked the Cold War. When Boris Yeltsin launched a military
assault against the Russian Parliament in the fall of 1993, the West, led by
the Clinton regime in Washington cheered him on. Although an odd precedent
for democracybuilding, their man-in-Moscow was seen as the best hope to
continue with brutal economic reforms.

Today, turning blind eyes to unholy alliances with despotic leaders is
common practice. So Kuchma in the Ukraine or Aliyev in Azerbaijan are wooed
and coddled despite blatantly undemocratic practices. The worst case is
probably that ‘warrior against terrorism’ the President of Uzbekistan, Islam
Karimov – the recipient of US troops and much Western largesse who now runs
a vicious police state. Uzbekistan currently holds some 6,000 Muslims in
custody for simply practising their religion outside official
Government-approved channels.4

A kleptocracy has emerged almost everywhere in this region. Those who had
power and position under communism have repositioned themselves as either
economic oligarchs or political bosses. In many cases they are one in the
same. In Eastern Europe this process has in part been kept in check by a
relatively open political system. Elsewhere the looting of public wealth has
been pretty crude. Russia and Armenia have emerged with some of the most
severe gaps between wealth and poverty in the world.

The system takes a ride

In a car on the way to Ukraine’s airport at Kiev, a police officer looms
with a torch out of the early morning fog. Our driver is deemed to be drunk
(at 6am in the morning!) and a ‘fine’ of $100 is required if we are to catch
our flight. The amount is half of what our friend makes in an entire month.
It’s a common story: the kind of corruption that occurs at the top gets into
the very bones of a society as people follow the examples, of their élites
at a micro-level. It’s not so much a question of morality as it is one of

An ugly political culture is emerging. Cars blow up mysteriously or people
just disappear. Deaths occur in police custody. Assaults by some
quasi-official security force take place on offices and computers. Important
documents are removed. A key figure or potential witness to a corrupt deal
gets killed in a runof- the-mill robbery. It smacks of organized crime
vendettas where the motive is revenge or cover-up.

Overt political motivation is here too. It is widely believed that the
bombings that killed dozens in Moscow apartment buildings before the second
brutal Chechen war – a war that cemented Vladamir Putin’s strongman image –
were the work not of Chechen terrorists but of some murky department of the
Russian security service.5 Then there is the Ukrainian journalist – a thorn
in the side of the Kuchma regime – whose head turned up in the woods outside

For most of the population this is simply theatre to be observed with a
shake of the head or a shrug of the shoulders. Proof of the failure of
society to free itself from the iron grip of the state. Proof that nothing
ever changes.

I thought of different ways to take the measure of post-communist life in a
market economy. What would the Rand Corporation do for instance? Ah-hah, I
thought… a focus group. So I got together a group of Armenian students for
a discussion. They were just entering their teens when the old system came
apart. Now they were university students and finding it very tough. On the
positive side, they said that they had more freedom to speak their minds now
and that life was more interesting. They all felt their access to the
internet was very important for democracy.

But education was very expensive and depended on a massive family effort.
All lived at home. They recalled the days of free education when students
could travel anywhere in the communist world. They worried for Armenia. They
worried about jobs: that many must now go to Russia for work. They worried
too that foreigners were buying up essential services – the Italians had the
water, the Russians the electricity. They especially worried about the
growing gap between rich and poor. They wondered why they couldn’t have the
best of both worlds: the new freedoms but also the equality and the
guaranteed security of the old system. Good question.

1 Stephen F Cohen, Failed Crusade, Norton, New York, 2001.
2 Joseph A Schumpeter, Capitalism, Socialism and Democracy, Harper, New
York, 1975.
3 2003 World Development Indicators, World Bank, Washington.
4 Human Rights Watch, 2003.
5 Boris Kagarlitsky, Russia under Yeltsin and Putin, Pluto, London, 2002.