New insights on the Soviet Union's collapse

A former Russian official blames the threat of famine, not Gorbachev's reform policies.

By David R. Francis | Columnist

from the July 23, 2007 edition

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Crude oil prices last week were flirting with a record high. It's great news – for the Russians.

Low oil prices contributed to the fall of the Soviet Union in 1991. In Russia today, high oil and natural gas prices are, to a large degree, the reason for an economic boom.

In the first quarter of this year, Russia's economy steamed along at a level 7.9 percent above the same three months of 2006. Last year, Russia's gross domestic product was up 7.8 percent, notes Charles Movit, an economist at PlanEcon, part of Global Insight, a consulting firm in Waltham, Mass.

Russia's growth rate is not quite up to that of China. But, as Mr. Movit puts it, the rate is "pretty enviable from a Western standpoint."

With its massive exports of gas and oil (at least $200 billion a year), Russia has considerable economic clout in Western Europe. It supplies 40 percent of Germany's natural gas, for instance.

"Russia is very strong," says Marshall Goldman, an economist at Wellesley College in Massachusetts. It may even be "stronger than in its history" – a view not widely shared by other Russia experts.

In November, the Brookings Institution will publish the English translation of "Collapse of an Empire: Lessons for Modern Russia," now a bestseller in Russia. Written by Yegor Gaidar, an economist who was Russia's acting prime minister between 1991 and 1994, the book uses information from Soviet archives to tell the story of the last few years of the Soviet Union. It tries to shoot down the "myth" held by most Russians that the Soviet Union was "a dynamically developing world superpower until usurpers initiated disastrous reforms." It also warns that Russia should avoid the peril of another collapse in oil prices.

What happened, states Mr. Gaidar, is that Soviet grain production stagnated between 1966 and 1990. Meanwhile, 80 million people moved from farms to cities. New Soviet output of oil and gas was not sufficiently expanded to provide the hard currency needed to buy grain abroad. Eventually, the Soviets had to borrow foreign money to buy grain.

Mikhail Gorbachev, the last leader of the Soviet Union, told a meeting of the Communist Party, "We are buying [the grain] because we cannot survive without it," noted Gaidar in a talk to the American Enterprise Institute (AEI) in Washington last fall. An associate of Mr. Gorbachev had warned in March 1991 of the risk of famine in June if foreign grain wasn't obtained.

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