Saturday, June 3, 2017

Russian vs Chinese Reform Effects 1985 - 2017

The 1980's saw the fundamental structural change of the two largest communist countries in the world.  In 1985, the Soviet Union under Gorbachev and in 1986 China under Deng Xiopeng.  Since the bulk of the previous articles focused on China, the following begins to consider Russia.


Vladimir Putin endured harsh times in poor assignments as a KGB officer during the leadership of Leonid Brezhnev, who presided over the USSR from 1964 until his death in 1982. This period under what the west termed "détente" or relaxing, Brezhnev signed in treaties on armament control (SALT I, SALT II, Anti-Ballistic Missile Treaty).  Putin saw Brezhnev as a mediocre leader who hated confrontation and so let President Nixon and then President Reagan push Russians into bad agreements.  Simultaneously, the USSR built up its armed forces and foreign military intervention at great economic expense.  Yuri Andropov, the former head of the KGB replaced Brezhnev in 1982 only to die 15 months later and be replaced by Konstantin Chernenko, who died 13 months later.


When Mikhail Gorbachev became General Secretary of the Communist Party of the Soviet Union in March 1985, the country's economy suffered from the extraordinary military expenditures and faced the United States economic prowess lead by Ronald Reagan. Gorbachev saw glasnost ("openness") as a means to get the USSR moving technologically.  The USSR produced more iron ore than the US but industry waste meant in produced half the iron.  Simultaneously, Gorbachev pushed a policy of "perestroika" (restructuring) in the Soviet government intending to rid the government of inefficiency as he removed it from industry.
From 1985 to 1990, Putin served as a KGB agent in Dresden, East Germany. Tiananmen Square protests of which started April 15, 1989 and lasted until June 4, 1989 deeply affected the Soviet government's actions in response to protests in Soviet constituent countries.  In 1989, as protesters began ransacking East German government buildings, Putin burned his KGB files, which he considered otherwise useless press clippings, in the Soviet Offices.  Born just after the WWII in the war torn St. Petersburg (Leningrad) to a hard life in a one room apartment, Putin had lived the brutal calculating life of a thug.
After Putin returned to St. Petersburg in 1990, he resigned from the KGB and quit the Communist Party, bailing out of a dying regime.  Putin got a job in the Mayor's Office in St. Petersburg, with responsibility for promoting international relations and foreign investments.  The 15 republics that made up the Soviet Union began to fall apart, and on 8 December 1991, Russia, Ukraine and Belarus signed the Belavezha Accords, which declared the Soviet Union dissolved.  On December 25, 1991, Gorbachev declared office of the President of the USSR extinct as he resigned tuning power over to Russian President Yeltsin.  The next day, the Supreme Soviet, which had been the Soviet Union's highest governmental body voted itself out of existence.
Liberals anticipated the rise of a democracy; however, the collapse of the Soviet Union strict structure brought severe drop fall in living conditions as poverty, crime, corruption, and unemployment skyrocketed.
Russia created private-national corporations from state owned enterprises (SOE) which created corporations such as Gazprom as a monopoly in the gas sector.
As people were starving in St. Petersburg, Putin reportedly directed $93 million in Russian state bulk metals to be in exchanged for foreign food aid that never arrived.  Starting in 1996, he rose through a liberal political party by managing elections, not running himself.
By mid-1998, Russian President Boris Yeltsin had appointed Putin as Director of the Federal Security Service (FSB), the successor of the KGB.  On 31 December 1999, Yeltsin resigned, which made Putin the Acting President of the Russian Federation. Three months later, Putin won the Presidential elections with 53% of the vote.
June 2000, Putin upon assuming the office of President of Russia, Putin ostensibly moved to control the huge political power that capitalists in Russia had gained beginning with firing the Chairman of the Gazprom board and replacing him with Dmitry Medvedev, one of Putin's subordinates from St. Petersburg. 
After a constitutional maximum of two terms as President, Putin essentially installed the liberal looking Medvedev as President for one term.  This was long enough for the term of the president to be increased to 6 years.
The 1980's saw the fundamental structural change of the two largest communist countries in the world.  In 1985, the Soviet Union under Gorbachev began to move toward decentralized Soviet control and a multi-party democracy. While nearly simultaneously, in 1986 China under Deng Xiopeng moved toward "capitalism with Chinese characteristics" meaning free enterprise but one political party.
Since the 1980's, Russia became a state essentially ruled by one man, who dissolved democratic organizations while reconsolidating control over former state owned enterprises (SOE) with questionable closed accounting practices intended to promote Russian state policies.
Simultaneously, China brought in international accounting firms to advise the privatization of state owned enterprises (SOE) essentially phasing them out while lifting an estimated 800 million people out of poverty.
One result is that in April 2017 China has a GDP 2nd in world while Russia's GDP is 10th after Canada, Italy and Brazil.  Neither country is a multi-party democracy.  One is the largest geographically, and has immense natural resources, and the other contains the largest population.  Both continue to strictly control their populations.

References:
1.  Man Without a Face: The Unlikely Rise of Vladimir Putin, by Masha Gessen, March 5, 2013
2.  Dealing with China: An Insider Unmasks the New Economic Superpower, (April 12, 2016), by Henry M. Paulson,
(plus articles and books cited previously below)

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