Russian Workers Begin to Flex Their Muscles

by Ted Grant

Russia is in the grip of an economic catastrophe. The Rouble is in freefall, falling by 40% against the Deutschmark in one day, the stock market has collapsed, banks are failing and Russia has defaulted on its debts. The state is facing financial collapse and the workers are beginning to flex their muscles.

The whole attempt to introduce the "market economy" has backfired. Ironically at the time of the fall of the Berlin Wall, Russia was looked at as a new market, a savior for western capitalism. Now like South East Asia that has been turned on its head with the prospect of an Asia-Russia crisis precipitating a worldwide slump.

The collapse of the rouble had immediate international repercussions, driving down the value of the Danish, Australian and Greek currencies, while the stock markets of Britain the US and Germany fell by over 100 points.

In reality what we have in Russia is "crony capitalism" where the greed and rottenness of the Mafia gangsters and big businessmen have led to the present situation.

One of the main problems facing the Russian government was its inability to get the entrepreneurs to pay their taxes. To make up for the lack of income from legitimate taxation the government has been financing its expenditure with GKOs, government bonds, that are in effect state-backed IOUs.

Any government that has to finance itself on the basis of short-term bonds offering yields of 60 per cent or more is inevitably going to bankrupt itself. It is simply paying off today’s expenditure by piling up huge debts for the future. At a certain point the government can no longer find the cash to pay the interest on these bonds and then it finds itself in a huge financial crisis.

Economic Collapse

The lack of income is due to several factors. The most important is the enormous collapse in production in Russia. Every year for the last six years there has been a fall in production, amounting to a total collapse of about 60%. That is like suffering the destruction of two World Wars. On top of this comes the effect of the South East Asian crisis of last year. This has now spread to Japan and is also being felt in Western Europe and the USA.

This has had the effect of cutting back the markets for raw materials such as oil and gas, the price of which has fallen steeply. In the case of oil, from $18 to $12. This is especially damaging for the Russian economy as it has been relying fundamentally on the export of goods such as oil, gas and nickel, as its main source of hard currencies such as dollars, which it urgently needs to pay off its foreign debts.

The only real investment has been in the oil and gas industry. The rest of industry has been left to its own devices.

Russia which was once a highly productive agricultural economy now has to import half its foodstuffs. The Mafia oligarchy is treating Russia as a colonial country. They want to turn it into a purveyor of raw materials, oil and gas, and an importer of all the necessities.

According to investment banker Andrew Ipkendanz, "Russian elites have plundered the country’s capital and funneled most of the proceeds offshore."

The science and technique that had been built up through state ownership, in spite of the corruption of the Stalinist regime, has been whittled down, and now all sections of the population are affected by this crisis.

No Solution

The Kiriyenko government, before being sacked by Yeltsin introduced emergency measures, a devaluation of 34% of the rouble, a 90 day moratorium on debt repayment, basically a default, and a bank bail-out. Almost all of Russia’s 1600 banks have been made insolvent by the rescheduling of their main asset, short-term government debt.

These banks should be facing bankruptcy as a result, but as The Economist (22.8.98) says, "...all the important banks operate under the protection of powerful tycoons, who show every sign of expecting the state to bankroll their costly adventures... The banks have already been allowed to dip into the reserve deposits they are required to keep at the central bank, which practically amounts to printing money to bail them out."

Even so some have already gone to the wall. The banking crisis and the collapse of the currency means a big increase in inflation, even hyperinflation is to be expected over the next period, which will hit the people of Russia even harder.

However, none of these measures are going to help alleviate the situation. In mid August the latest statistics showed that real wages were down 8.9%, unpaid wages had gone up by 6.5% and GDP was down 4.5%.

Roubles

As the same issue of The Economist stated, "So Russian workers, who will have to save more roubles than before to buy flats (which are priced in dollars) and foreign-made goods, are not likely to see those costs compensated by new jobs, much less higher wages or, for that matter, by wages paid in cash instead of in kind. So it is not clear that anyone, aside from tycoons, is better off after this new financial package." Even paying outstanding wages is little compensation when the value of the currency has collapsed.

The policies of the last six years have provoked a sharp fall in living standards with a large percentage of the population falling below subsistence levels. The leading elite will argue that a further period of "sacrifice" is necessary, that all that is necessary is to wait a little longer and all will be fine. But the workers of Russia were already reaching the end of their tether, before the current crisis.

There is a new wave of strikes and factory occupations taking place that is not reported in the west. In all the articles of the big business press you will find pages and pages on the financial crisis, on the political maneuvers of Yeltsin, Chernomyrdin etc., but on the workers movement you get one sentence or, at best, one paragraph.

Unpaid Wages

Interestingly The Economist (ibid.) has started to take note of these movements and has reported that, "Outside parliament trade unions are demanding that their unpaid wages - around 78 billion roubles ($10 billion at the new exchange rate) - should be adjusted to compensate for the 20% devaluation seen this week. They have called a strike for October 7th... Labour protests, although disruptive, have not yet crystallized into national strikes. But... will become more virulent if the economy slumps..."

That movement has already started. In fact symptoms of what was to come could already be seen in the Day of Action of 9th April of this year. On that day workers from Vladivostok to Kaliningrad marched on the streets in support of the all-Russian trade union action. About 14 million people took part in all forms of protest of the Trade Unions of Russia (FNPR). According to the union, the people expressed their protest in the form of rallies, marches, pickets and strikes. In particular, about two million workers of 12,000 Russian factories and institutions suspended or fully stopped work on the day. Protests took place in 79 of Russia’s 89 regions as millions of workers demanded their wages and urged a change of course in the government’s economic policy. "President, change your course, remember the Titanic!" said one placard addressed to Boris Yeltsin.

The then Prime Minister, Kiriyenko, met the trade union leaders, while 10,000 workers picketed outside and at a later cabinet meeting Kiriyenko said that approximately R700m had already been transferred to the regions and that the meeting would be working out measures to pay overdue wages. It was reported that the central government in Moscow had dispatched billions of roubles by plane, train and truck to distant regions in a massive overnight operation. Observers believe that the DM1.25 billion raised from the placement of Russian Eurobonds was used for the purpose.

What was happening was that the government was literally buying time by sinking further into debt simply to pay off a part of the unpaid wages. But this could be no long-lasting solution. It was simply a measure to stave off a movement of the working class.

That movement is now back, and with a vengeance. This summer the miners began to move once again with a series of railway blockades. But tired of believing in promises, miners from throughout Russia brought their protest to Moscow on June 11th and began a picket of the White House.

150 angry miners from Vorkuta in the Far North came down to the capital to stage a protest against wage arrears. The miners of Vorkuta are some of the most militant in Russia. The only thing between the miners’ families and starvation is the one meal a day provided by the pit canteen. The high wages they used to get to enable them to move south on retirement have disappeared, and any savings have long since been destroyed by inflation.

They came with the support of all of Vorkuta, teachers, doctors, pensioners, all contributed whatever they could to the funds to pay for the miners travel. The miners marched on the White House, the government’s headquarters and they remain there now. They came prepared for a long vigil. At a press conference leaders of the trade unions said that the action would last as long as the miners could hold out. This time the miners came with political demands as well as demands for unpaid wages. Their demands were made clear by the posters the pickets held, reading : "Down with the President!"; "Yeltsin, give our money back!"; and "Yeltsin, we brought you to power, we will bring you down!"

In fact the Independent Trade Union of Russian Miners (NPG) had previously supported Yeltsin and in 1996 it called for a vote for him. But apart from the payment of their wages, virtually all Russian miners are now demanding the resignation of the president and the holding of early presidential elections. The government was accused of attempting to resolve all problems within the framework of the current budget – a budget which now owes the miners 3bn new roubles in wage arrears.

The miners of Vorkuta were quickly joined by up to 400 others from the Kuznetsk coalfield, and Rostov Region. Others have joined the protest at various times including miners from Sakhalin Island, Chelyabinsk, the Urals, Norilsk, Kemerovo, Tula and Rostov. A small contingent of nine workers representing the giant AvtoVAZ car maker in Togliatti joined the protest. Protesting scientists, students and Moscow metro workers also have joined the protest at various times.

Every two hours from 8 a.m. to 8 p.m. the miners remind the politicians of their presence by gathering on the bridge outside the White House and banging their hard hats on the cobblestones. The sacked Deputy Prime Minister Boris Nemtsov was reported as only being prepared to start talks if the pickets gave up political slogans and demands which the miners seem reluctant to do.

Demonstrators

Although they are largely being ignored by the government, the demonstrators are certainly not being ignored by the rest of the city. Moscow’s mayor, Yuri Luzhkov, has laid on portable lavatories, water to drink and in which to wash, and deliveries of sandwiches (a gesture widely reported in the press as part of his expected presidential election campaign in 2000.) But it is from "ordinary" Muscovites that the miners say they have been overwhelmed by support. The water tanker and six toilets provided courtesy of Luzhkov stand to the side of the encampment, near a makeshift washing area. But for their showers, the protesters have been accepting offers from city factories and sympathetic residents, many of whom regularly deliver food and support to the picket.

The delegations taking part in the picket are a testimony to the fact that now a movement is developing on a national level. In Partizansk, known as the "mining capital" of the Maritime territory in the Far East 50 workers of the Nagornaya mines management office took their director hostage on July 28th demanding payment of wage arrears. 1500 miners blocked the Trans-Siberian railway. Workers from the Zvezda nuclear submarine repair yards, teachers and others joined the miners. In the town itself there are frequent rallies involving almost all the population. Wives of the coal miners recently said if wages remain unpaid they will hold a "women’s rebellion."

The situation becomes more explosive by the day. Coal miners say that they no longer believe promises. Reports say that most families do not even have basic foodstuffs. In unison with their wives, coal miners have threatened "to take pitchforks and crow-bars" to force the payment of their delayed wages.

It is not just the miners who are on the move. July 23, 1998 saw thousands of workers at Russia’s top nuclear weapons research center on strike for three hours. Ivan Nikitin, head of the strike committee at the Institute of Experimental Physics in the closed nuclear city of Sarov, said 3,500 of its 18,000 scientists and other workers had signed up to stop work and rally on the town’s main square, "Some people have not been paid since October 1997, most people have not been paid for four months on average."

These same defense workers rallied in Moscow to demand the resignation of Yeltsin and called for early presidential and parliamentary elections. The workers on the demonstration passed a resolution which demanded that the government’s economic policy be changed, the national industry be revived and government debts to defense enterprises be paid off.

Political Demands

Political demands are now becoming a characteristic feature of every movement of the working class. Everywhere the demands are for the resignation of the President and the government as well as a change in the direction of economic reforms. The BBC’s correspondent Alan Little reporting on the 26th of August believes such a change of course is now likely: "Early indications are that Russia will return to some kind of state control and central planning. The experiment with free market capitalism is coming apart at the seams. The Yeltsin project and the Yeltsin Presidency are unraveling."

Ominous to the west was Chernomyrdin’s recent talks with the Presidents of Belarus and the Ukraine about closer economic integration between the former Soviet Republics.

Yeltsin thinks that Chernomyrdin can save the situation for him. In reality the whole regime is teetering on the edge of collapse. There is only one thing that maintains it, the role of the so-called Communist Party. The Independent on Sunday (23.8.98), not renowned for its revolutionary politics can see this. In one article it said, "... there is no real rallying point for popular protest... Though full of thunderous rhetoric, the political opposition, including the dominant but feebly led Communists, shows few convincing signs of wanting to wield power... The trade unions are compromised by a traditionally cozy relationship with the ruling elite..."

For a long time the Communist Party leadership had consistently tried to do deals with Yeltsin. Only now that is obviously clear that his grip on power is slipping have they called for his resignation, but instead of putting forward a bold socialist program, instead of basing themselves on the movement of the working class the Zyuganov leadership of the Communist Party has called for "a government of national trust to be set up". That means Zyuganov is prepared to enter a government together with the representatives of the Mafia oligarchy who are responsible for the whole mess that has resulted from the attempt to go down the capitalist road. It is absolutely incredible!

If the Communist Party had one ounce of Lenin’s understanding we would now be facing an immediate revolutionary situation in Russia. The workers could be on the verge of taking power.

However, in spite of the leadership of the Communist Party we will see revolutionary developments with the working class drawing the lessons of the last six years, and they will take things into their own hands. Large sections of the working class have come to the understanding, from their own experience, that capitalism does not work.

The Communist Party is afraid of taking power because it has no real alternative to offer. Their only real concern is for their own careers and how to hold the movement of the workers in check.

The situation, however, cannot be held for long. Something must give, and in spite of themselves the Communist Party leaders could find themselves catapulted to power by the movement of the working class. Most likely they will prefer to do this in the form of a coalition government, together with business representatives.

The serious strategists of the west are terrified at the prospect of a new revolution. In July the Russian government managed to get a loan of $14 billion from the IMF, but that didn’t prevent the collapse of the currency within weeks. In the past they have given enormous sums to stave off the prospect of revolutionary developments, but now they are no longer prepared to throw good money after bad, and that is what has precipitated the crisis. Theo Waigel the German Finance Minister summed up their attitude, "Russia must do it by itself."

Already we have seen how the Russian workers, in spite of everything, have not lost their revolutionary traditions of 1905 and 1917. Whenever there is a serious movement they throw up their own democratically elected workers’ committees. These will spread like wildfire once the movement develops.

Working Class