A potentially significant move to limit the growing financial and economic stranglehold of U.S. and other imperialist powers on the economy of the former Soviet Union has been torpedoed only one day after it was initiated.
The developments took the form of a contest between the head of Russia's central bank and some of the other high-ranking officials of the reactionary Yeltsin camarilla now running the former Soviet republic. But because they centered on relatively obscure economic and financial matters, the meaning of the moves was camouflaged.
On July 24 the central bank announced that all bank notes printed before 1993 would be withdrawn from circulation by July 26.
Now, ordinary Russian workers do not usually have bank notes. If they do, it is in small amounts. U.S. savings bonds would be a parallel. Many workers in this country bought them, especially during World War II, but they're not the primary currency.
However, there is a difference. An untold number of Russian bank notes have been accumulated over the years. They are in the hands of big speculators, new elements that have rapidly been growing into a formidable new financial bourgeoisie. This grouping rivals even those who have bought into the socialized industry over the years, particularly since the demise of the Gorbachev regime and the Yeltsin takeover.
There are vast numbers of bank notes, and they are easily convertible into rubles or dollars. The scheme behind the currency change--which is what the move really amounts to--is to find out who owns the bank notes.
Sudden change of heart
In a statement explaining its action, the central bank said it was necessary to rein in inflation and get a better hold on the money supply. This is what any number of capitalist governments have done over many years as anti-inflationary measures to shore up the capitalist economy.
When the Russian central bank announced its decision, it initially provoked no significant opposition from other government officials. Yeltsin said it would be a helpful measure.
But within 24 hours all those officials, from Yeltsin down, suddenly changed their position drastically. What had happened to change their minds? The U.S. government had jumped in with both feet.
Enter the Harvard professor
For one thing, the Russians got a lecture from a certain Mr. Jeffrey Sachs, a Harvard professor who has been an adviser to the Russian Ministry of Finance. He is really a police watchdog put there by the U.S. and other imperialist powers to monitor the financial affairs of the Russian republic.
Russia is a country of 150 million people, with vast resources and vast economic and financial experience over many decades of socialist construction. The very idea that this country would accede to having its Ministry of Finance policed by the imperialist powers is so humiliating that it must be hard for an ordinary Russian to believe.
True to his mission as a loyal flunky of the imperialist government, Sachs immediately alerted Washington of what was afoot. He advised the U.S. that the Yeltsin government had taken this measure without consulting him or the International Monetary Fund--or anybody else outside the Russian government. This is what so upset the imperialists--the bankers in particular.
What is this measure, after all?
Changing the form of currency is not an exceptionally original idea. It has been tried any number of times by other governments, especially in the imperialist epoch. If it's only a change in the form of the currency, or the form of the indebtedness, it has very little significance.
But in this particular case it is socially as well as politically significant. The pre-1993 bank notes run into the millions. If they were held by ordinary Russian workers or other citizens, changing the form of the currency would have little significance. It would be changing one piece of paper for another. But this currency change makes it a condition that all who hold the bank notes must present them for change on a certain date--or they will lose interest on them and suffer in other ways.
It compels all note holders to present themselves to the bank so they can be identified. The number of bank notes they hold can be verified.
Why should this upset the imperialist powers so much?
Precisely because many of these bank notes, which are transferable, are already in the hands of big speculators who have over the years become the new financial bourgeoisie in the former USSR. Foreign banks--of the imperialist powers--also hold a great many of the notes, either as collateral security for loans or in escrow. The imperialist banks thus are shielded from taxation on the notes.
All in all, the measure was calculated to rein in the growing preponderance of the imperialist banks and their governments in Russia's internal affairs, including in the most delicate matters concerning the Yeltsin government's finances.
It is the first time the Yeltsin usurpers of the Soviet government have had to take a measure that would in any way touch on the interests of the imperialists, and also, to a smaller extent, rein in the growing might of the new financial bourgeoisie in the former USSR. This grouping rivals the industrialists who have been busy pillaging the socialist economy and find themselves in a quandary about what to do with their purchases.
Stability just a dream
Yeltsin and his cohorts may have had a phantasmagoric dream: to make out of the wreckage of the USSR a stable capitalist country able to not only exist but to compete with other capitalist powers as an independent country.
But capitalist stability in the former USSR is an illusion. Chaos and economic anarchy are the order of the day.
The flight of rubles into dollars is a continuing threat to the economy that makes capitalist stability an elusive objective. The Yeltsinites' original intention was to obtain generous loans from the imperialist powers. This was to facilitate the development of a stable capitalist system in the USSR.
But the imperialist powers are less concerned with stability in the development of capitalist relations in industry, and especially in finance, than they are in milking the country of its vast natural resources: oil, gas, lumber, rare minerals, etc.
Yeltsin immediately tried to soften the blow of the withdrawal of the old rubles. He proposed a complex plan of his own. In his plan, unlike the original, the truly large holders of bank notes would be able to redeem them without suffering any kind of damage.
Overall, this initiative by the central bank is important because for the first time it gives us a sort of inside look at how the Yeltsin government is dealing with some of the most burning issues that actually confront the mass of the workers and peasants.
Fear of being overturned
Every regime of reaction that takes over from a progressive or socialist government lives in deadly fear of being overthrown--precisely because it is the enemy of the workers and of the mass of the population generally. It has no real program to improve on earlier achievements but can only break down that which was progressive and helpful in constructing a stable socialist society.
The Yeltsin grouping is no different from others that have taken over from an overthrown progressive government. Experience in Chile, Nicaragua and elsewhere has shown that the new ruling group must either resort to terror or find some way to satisfy the needs of the masses. The Yeltsin government has avoided a direct onslaught on the living standards of the people. Instead of a frontal attack, it has sought roundabout measures. The idea is still to cut the living standard, but by devious ways and without an open struggle.
This latest measure scarcely touches on basic interests of the workers or peasants directly. But it is significant for the financial bourgeoisie and for untold numbers of the petit bourgeoisie.
USSR after WWII
In the period right after World War II, the Soviet Union went through a currency change. It enabled the USSR to rein in a great many speculators and a growing number of bourgeois elements who had profited from shortages and other difficulties. A grouping of traders and commercial speculators had been able to profit off the war.The currency change at that time forced holders of old rubles to bring them in for exchange. They were thereby identified, and the number of rubles they held was known. This effectively curbed the then-growing influence of bourgeois elements trading in commercial and financial transactions.
The imperialist bourgeoisie at that time, as reflected in the New York Times, howled. But it couldn't do anything about it.
This time around it holds the financial and economic levers to the prostrate and broken former USSR.
Role of central bank
In the pantheon of capitalist institutions, the most reverential position is held by the central bank of any capitalist country. These banks, like the Federal Reserve Bank in the U.S., are supposed to be above politics. It should show no inclination toward leaning one way or another with respect to political parties or high government officials, including prime ministers or presidents.
Once appointed, the governing group in the central bank is supposed by law to be strictly independent of the executive and legislative arms of the capitalist government. Of course, they're supposed to report, as does the Federal Reserve Board, to Congress and the president. Almost always, the chair of the board is a diehard reactionary, as is the case with the current chair, Alan Greenspan. It goes without saying that the Democratic-controlled House and Senate quickly approve nominees to the board.
In Russia, the new bourgeoisie, in its ridiculous posture of being truly independent, did actually allot wide latitude to the central bank in its normal operations.
As with every central bank in the epoch of imperialist decay and disintegration, the Russian bank's main objective is to rein in inflation and hold down the money supply. This is what the Russian central bank was trying to do with its bank-note maneuver at the end of July. By withdrawing them from circulation it might conceivably--but only conceivably--lessen inflation, and hold back the growth of the money supply.
But it touched on a raw nerve with the imperialist powers, especially the U.S.
So while the Yeltsin government initially approved the bank-note withdrawal, under the whiplash of U.S. and other banks it made a quick turnaround--leaving the Russian central bank holding the bag. A more sorrowful situation for a truly independent central bank can scarcely be conceived.
Instead of being supported by the government, it was left completely left on its own. Yeltsin issued a hocus-pocus decree that was supposed to somewhat modify the bank's original intent. In reality, it was just a face-saving measure. It really leaves matters essentially where they were before. It will predictably worsen the economic situation.
As the economic situation deteriorates, everything points in one direction. The stage is being set for a mighty, independent intervention by the working class in the USSR. It, and it alone, is the final arbiter in the struggle to resuscitate the revolutionary socialist objectives of the early Soviet government.