Part 2: Meet the New Boss
The Swiss psychiatrist Elisabeth Kubler-Ross described five stages of grief: denial, anger, bargaining, grief, and acceptance. In a way, Russian liberals went through most of these following Zhirnovsky’s victory, except that “denial” wasn’t possible considering that he had decidedly won and “bargaining” couldn’t happen because there was no loophole or the like stop him from becoming president. The rest of the world, regardless of their feelings, had to face up to the fact that a man in charge of a country larger than Pluto, with 100 million people, and thousands of nukes was a man who not only showed a stark antipathy towards the West but was also probably mentally ill. Yeltsin considered, for a time, to try and embark on a military coup and become president for life until realizing that nobody in Russia would want that.
And so Zhirinovsky was invited to the Russian Presidential Palace, he would shake hands with Yeltsin, and tried to put on a more “sane” face in front on foreign reporters. Overall there was no major controversy in the transition of power other than Zhirinovsky demanding Bukovsky be publicly hanged along with other pedophiles. But nobody really cares about pedophiles so nobody was that outraged.
On February 17th, 1994, in a ceremony which, at times, resembled the American one in a way (perhaps purposely, in an attempt to allay any worries that the West might have), Vladimir Volfovich Zhirinovsky became the second President of the Russian Federation. When he opened his mouth, many expected another deranged tirade like he had given throughout the 1993 campaign, and before. Yet surprisingly, that was not the case. He was more calm, cool, collected. His speech was nationalistic but it was optimistic as well. It harked back to the times when Russia was a great, respected country, and promised that under him, it will return to that. Religious themes would be prevalent as well. At the end of his speech, nobody knew what to feel. It was confusing. Could this just be an act? Or was Zhirinovsky being genuine? Was all of the anxiety of the past two months all for naught? Polls showed Zhirinovsky’s approval rating in the immediate aftermath of his speech hovering around the late 40s.
Zhirinovsky’s Inauguration
With the inauguration passed, it was now time for Zhirinovsky to do what he was elected for: to govern. The issue at the top of everyone’s minds was the same issue which had ruined Yeltsin and led to his allies being defeated. That issue was the economy. Yeltsin’s strict privatization had ruined the Russian economy and had left thousands without jobs, which in turn led to many being destitute and starved. Amidst all of the drama in the 1993 race over Yavlinsky’s running mate being a pedophile the platform of the parties - which, ideally, should be the main issue in a democratic election, was largely ignored. Zhirinovsky’s party supported government intervention in the economy, more than Gaidar, more than Yavlinsky, but only to a certain extent, and that differentiated him from Zyuganov. With all of the shock of “wow, this guy is our President” waning many Russians began to clamor the new government for a change in policy.
And so they did. Larry Summers and other Western economists were to be sent packing (“Good riddance!” declared Zhirinovsky). The easiest reversal of Yeltsin’s policies were the ones he did not get to finishing. The oil sector was one of them. Yeltsin had begun to move towards privatization of Russia’s oil sector during his short presidency. Since Russia is one of the largest oil producing nations in the world, Russia’s economy depended on a strong and stable oil industry. Zhirinovsky, not willing to entrust one of the largest parts of Russia’s economy to oligarchs which had campaigned against him in the 1993 Election, reversed all elements of privatization in the oil industry and placed it firmly within the control of the Russian Government. This did not have much of an affect on the Russian economy - the oil industry had been in control of the government during the entirety of the Soviet era, and steps made towards privatization were only just beginning. As such, renationalizing oil neither harmed nor improved Russia’s economy in any great sense.
Yet, it was with the renationalizing of the oil sector which had goaded Zhirinovsky into the belief that, if he could do that, so too could he embark on more radical changes. He moved on to voucher privatization. This program was a method in which citizens can be an inexpensive book of vouchers which would represent potential shares in a state-owend company. It was done before in the erstwhile Czechoslovakia (yet continued in its two successor states) with some success. In a way, this program was done with some good intention in mind: if they were to go with the open sale of state assets, then there would be a real risk of ownership by the Russian mafia and nomenklatura. 98% of the population would participate in this program, with even minors having a share, but since most of the public wasn’t in the know when it came to the economy, or either because they were poor, they were willing to either sell their shares or were unwilling to invest. As such, there was no great economic windfall, and much of the Russian public felt deceived, and support for the program quickly crashed.
Voucher worth 10,000 rubles, printed in 1992
Zhirinovsky would move to end the program. On April 2nd, Zhirinovsky gave a speech on Russian state television in which he declared the end of the voucher privatization program, and stated that the assets would be put under the control of the Russian government. By this point, a lot of the vouchers proved worthless and, much like renationalizing the oil sector, did little to impact the Russian economy in any direction. But nevertheless it showed to the Russian public that Zhirinovsky was willing to be a genuine economic reformer, and it did in a way keep his approvals from remaining above water.
Zhirinovsky managed to get much of his economic platform passed in the legislature, due to his party having a plurality, along with support from moderates of the Communist Party and sympathetic members of the Agrarian and Woman’s Party of Russia. The opposition from the Yeltsinite Democratic Choice Party and the remnants of Yavlinsky’s Yabloko Party were simply not strong enough to mount effective opposition against Zhirinovsky. Zhirinovsky, buoyed by the successes of renationalizing the oil sector and ending the voucher privatization, would move on to perhaps the biggest fish, that is, managing the central bank.
Zhirinovsky, like many populists within Russia’s political sphere, be they from the LDPRF or not, was not a big fan of the Central Bank. He saw the bank as a means by which wealthy oligarchs, who care mainly for themselves and their wealth, not for Russia, could loot the country, and as such felt that it had to be brought to heel. Further, Russia’s oligarch class was decidedly against Zhirinovsky. They had supported Gaidar in the first round and Yavlinsky in the second round, and reports of Bukovsky’s indiscretions did not dampen their support. In fact, they only increased support as they felt, quite rightly, that Yavlinsky would need it. But it would not be enough, and now they would be at the mercy of Vladimir Zhirinovsky.
The first steps taken to declaw the Central Bank were not anything which could’ve been seen as hasty. You could probably get Zhirinovsky to agree to an abolition of the Central Bank after a few drinks. He was not against to the idea and could’ve been sympathetic to it but it never came to him. On April 8th, the Russian Duma would vote to halve interest rates, implement capital controls, and to regulate the usage of foreign currencies.
The immediate impact of this was that the Moscow Interbank Currency Exchange, at the time the universal stock market for all of Russia, suffered a sharp decrease. By placing tough regulations on the usage of foreign currencies many foreign investors began to leave the country, taking their fortunes with them. However, the Russian people did not begin to immediately suffer the consequences of this until sometime later, after all, in a country which has just established a stock market, said market suffering hits did not do much to hurt the average person. However, by curtailing the powers of the Central Bank, regardless of whether or not it would’ve improved Russia’s economy, led to outrage from Russia’s oligarchs. They would’ve allowed some steps such as renationalizing the oil sector, along with ending some of the smaller aspects of Yeltsin’s privatization program, but by engaging in such reckless behavior regarding what was essentially their workplace - it both enraged, and scared, them.
One of the leaders of these oligarchs was Vladimir Vinogradov. Vinogradov was a banker and was one of the first who would sound the alarm over Zhirinovsky. Like many oligarchs, he was in support of Gaidar in the first round of the 1993 Elections before moving onto supporting Yavlinsky. He, Vladimir Gusinsky, Leonid Nevzlin, Mikhail Khodokorvsky, Vladimir Potanin, Alexander Smolensky, and Vitaly Malkin would lead a group of some of Russia’s wealthiest who would try to use their influence, in any way possible, to ensure that Zhirinovsky’s agenda is trampled in his term, support opposition parties in the upcoming 1995 Legislative Elections, support any possible impeachment attempt, and if not that support whoever would run against him in the 1998 Election.
Cемибанкирщина - The Seven Bankers
One of these oligarchs, Vladimir Gusinsky, was a media tycoon whose role supporting the Moscow Mayor, Yury Luzhkov, while he was caught up in a political scandal, arguably saved his political career, suggested that a media offensive against Vladimir Zhirinovsky and his government would be conducive in harming Zhirinovsky’s political ambitions. He reasoned that, since it was the media which would bring to light the sexual crimes of Vladimir Bukovsky, which ultimately sunk Yavlinsky’s campaign and led to Zhirinovsky’s victory, that it showed how powerful the media could be and that it could be used against Zhirinovsky as well. This was agreed upon by the rest of the six bankers. Gusinsky had already established Russia’s first private channel, NTV (which, as stated by Gusinsky himself, had no meaning), and by virtue of NTV being Russia’s first private channel meant that there were a lot of people willing to tune in even as more were being made. Further, during the 1993 campaign he was involved in creating the Segodnya (Today) newspaper, which, unlike the others who were at first in support of Gaidar, was pro-Yavlinsky from the start. With the help of the automobile magnate Boris Berezovsky, Gusinsky’s media empire would expand with the acquistion of Channel One, one of Russia’s most-watched TV channels.
The first anti-Zhirinovsky stories would come out by June. To say the least, they weren’t good. While the economy would begin to go south as a result of the lack of foreign investment, many people did not notice it and felt that it was a result of the previous economic slump under Yeltsin. Those who were most impacted by the lack of foreign investment were Russia’s stock brokers and bankers, those who were well-off on their own until Zhirinovsky’s reforms. And that was what the first stories focused upon. A documentary was put on NTV which detailed how some of Russia’s stock brokers would be put into destitution as a result of Zhirinovsky’s policies. Nobody in Russia really had much reason to sympathize with them and as such these documentaries never had their intended effect, though it does make for good comedy if you were to watch it. But their initial bad fortune was not to last. No, for as the Summer of 1994 was beginning to end, a leak would be sent to the headquarters of NTV, which stated that Zhirinovsky’s father was a Jew, and not only that, but he had been made the director of Shalom, a Russian Jewish cultural organization as recently in 1994.
And so, on August 20th, 1994, the first details of Vladimir Zhirinovsky’s Jewish heritage, and his involvement in Russia’s Jewish community, began to come out. To say the least, it had caused a political firestorm within Russia. The fact that the leader of Russia’s far-right could in fact, be a Jew, was just too ironic to ignore. Everyone opposed to Zhirinovsky latched onto it. Even among the far-right, Zhirinovsky would face criticism. Dmitry Vasiliyev, the head of the nationalist Pamyat (Memory) organization, which for a time was the main far-right organization in the country, would proclaim that this was the reason why Zhirinovsky was not a nationalist hero but rather, in his words, controlled opposition. In reality, Vasiliyev had refused to merge his group with the LDPR and was consternated to see how people who would’ve joined Pamyat would end up joining the LDPR instead.
Zhirinovsky would not have any of it, not even a little. Seeing as how the report came from a channel noted to be Russia’s first private television channel, he concluded that a suitable punishment would be the nationalization of Russia media altogether, with just a few, state-run channels, in its place. Zhirinovsky would announce this to the Russian people in a speech made on August 23rd, 1994, which would also consist of denials and threats made against opposition leaders and media oligarchs, including Gusinsky, and declaring that he was the victim of the “Jewish media”. At another time, in another situation, perhaps Zhirinovsky could’ve succeeded in this goal. But by doing it so close to after the controversy had come out, when the opposition had been buoyed and made more energetic by this story, and would mobilize and used any might they possessed to prevent nationalization of the media. He looked petty, someone who would do something as big as nationalizing the media just because of one bad story. Eventually, Gennady Zyuganov, who up to that point had supported most of Zhirinovsky’s economic and military proposals, announced on August 24th that the Communist Party would vote against any planned nationalizing of the media. For most of the legislation of the Liberal Democratic government, it was done with the help of the Communist Party who had agreed with the economic interventionism and the militaristic nationalism while at the same time standing opposed to any socially right-wing measures such as an attempt to limit immigration coming from Central Asia. Without Communist support, any LDPR measure would fail, and fail the attempted nationalizion of the media did.
The semibankirschina - the seven bankers who had come together to oppose Zhirinovsky, had won this battle. But Zhirinovsky would not falter. This conflict would be just one of the many wars he would fight throughout his time in office, among the ones foreign and domestic, those started by him and those not, with or without bloodshed. Indeed, one war was just beginning to start just near Russia’s borders...
