A Bulletin of Facts, Analysis, and Opinion
May-June 1995 Volume 2, Number 3


How Patriarchs and Rent-Seekers Are Hijacking the Transition to a Market Economy
by Oleh Havrylyshyn

Our Man in Kiev:
An interview with Robert Seely

New Monograph Publications

Perspectives On Line

News from the Institute

Spring 1995 Seminars

How Patriarchs and Rent-Seekers Are Hijacking the Transition to a Market Economy
by Oleh Havrylyshyn

Dr. Havrylyshyn is Alternative Executive Director for Ukraine at the International Monetary Fund. Following is an edited version of his presentation at the Seminar in Ukrainian Studies on November 3, 1994.

In many of the transition economies -- I think that about twenty-five countries can be labelled in that category -- we have seen not a process of going ahead with reform, but in fact, in the majority of them, a process of delaying reform. In answer to the question, "Why is the reform being delayed?" I am proposing the following hypothesis: that the old Soviet elite, the patriarchs of the Soviet period, have transformed themselves into a new form of patriarch which I call the "rent-seeker," taking the t erm from the well-known economics literature. Broadly, it means that people are able to make very large profits through the privileges that they can get from government, rather than through the hard work of the entrepreneur. People who make monopolistic p rofit based on government privileges are called rent-seekers. Now these patriarchs that have transformed themselves into a new version of patriarchalism economically, the rent-seekers, have essentially captured the process of transition from central plann ing to the full competitive market and are doing their very best to make sure that it stays in an in-between zone, in a mid-station where the benefits to them are at the maximum. The implications are that there is going to be stronger opposition to refor m, and that it is going to be difficult for the reformers in any country that has not already started.

Since about 1990, we can trace the process of countries trying to transform themselves from central planing economies to market economies, and make some assessments. Of about twenty-five economies, at best six to eight have achieved some initial degree of success to at least stabilize the economy, to begin to have the economic recovery, to begin to introduce basic market operations. That is not irreversible, and it may not continue, but there are at least a handful of such cases--in the Czech Republic, to a lesser extent in Hungary, Slovenia, Croatia (despite the war d ifficulties), the Baltic states, and the surprise case of them all--Albania. The rest are lagging. Despite its huge privatization, one cannot say Russia is really transforming itself succ essfully into a market economy. Ukraine, apart from very recent events (the election of President Kuchma), where there is a small window of opportunity towards reform, is an excellent example of postponed reform, and so are most of the rest of the newly i ndependent states of the former Soviet Union, as well as many of the Balkan states.

Many people continue to debate whether shock therapy is the better approach, or whether reform should be gradual, and what one needs to do. To me, it has become frankly uninteresting to ask what it is that you need to do to make the transition to the market; that is obvious by now. The really interesting question is why so few countries have actually done it, and so many have lagged.

My hypothesis has intellectual roots in particular areas of economic literature. There is a literature that deals with distorted market economies, namely, economies in which, while you have the market functioning as a major form of determinant of how t he economy works, you have a considerable amount of government intervention. India is a very good example. Most of Latin America, at least until some of the recent reforms in a few Latin American countries, is a very good example. Distortions consist of r egulating and controlling some prices, regulating international trade, not allowing it to be more or less free but imposing all kinds of government licensing and quota arrangements, providing government support directly through subsidies or indirectly thr ough special credits or other forms of taxation relief and so forth.

The development economics literature is extremely rich and has among other things an important concept called the "rent-seeking process." It consists of the following. Let us assume a distortion, such as when the price of energy in the world market is $100 a ton and the government of a country decides that domestic prices should be $20 a ton. Economists call this a price distortion. This price distortion means that the basic balancing of supply and demand is not going to function properly, and there w ill have to be some additional control by the government. If price signals are destroyed, the market does not clear supply and demand. Something else must be done. The control is through import and export licensing, or things of that sort. This then provi des a special opportunity for a special form of monopolism. Somebody who is able to obtain a license to buy that petroleum at $20 a ton and also can obtain a license to export it at $100 a ton is going to make a large profit, or "rent" from the privilege. It is based on some way of accessing, perhaps through privilege, the monopoly right that the government must somehow allocate or distribute. The interests which try to influence the government in order to be able to capture those rents are described as " rent-seekers." Seeking rents is done not by working hard on the factory floor but by spending your time in the capital city, lobbying the presidential office or the customs office, or Congress, for those privileges.

The political science or political economy literature dates from the nineteenth century and earlier (Smith, Locke, and others), but in very recent times is exemplified by Mancur Olson of the University of Maryland, in the discussions of the relationshi p between the nature of the market system and the economy, on the one hand, and the nature of the state. More explicitly, Olson has been exploring the question of "How do you get to democracy?" In "Dictatorship, Democracy and Development" (American P olitical Science Review, September 1993), he talks about the notions of the so-called roving bandits and stationary bandits.

In a very primitive economy and society, roving bandits prevail. People simply rob each other in order to become richer themselves. The first question that Olson poses is, "What may lead to a situation where roving bandits find it convenient to become stationary bandits, call themselves kings or governments, and instead of pillaging, tax people?" He then goes on to identify systemic economic reasons for the process. The argument is simple: stability and certainty of a government creates incentives to produce more. This means a higher economic base from which the "stationary bandit" (a king) can tax people, giving him more than he could get through pillaging. He cannot so easily find systemic economic reasons, however, for moving from stationary bandit ry to democracy. Now by looking at the history of the last four years of post-Soviet societies and how they have evolved, how can that intellectual basis be reformulated and applied to the present-day picture?

In the Soviet economy the elite--the heads of enterprises, the heads of collective farms, and of course the Communist Party heads--were patriarchs, in the sense that they lived not only on the basis of making high profits, high wages, or high taxes, bu t largely on the basis of being able to have a deal with the people. They were neo-feudal patriarchs, not only guaranteeing your job (at a very minimum wage), but dispensing favors: a vacation on the Black Sea, an appropriate amount of vodka for your da ughter's wedding, a stay at the sanatorium and, of course, a place at the Institute for your son or daughter. In the period around 1989-1991, as communism and the Soviet empire broke up, these Soviet elites were frightened, in disarray, uncertain what was going to happen to them. First, there were the threats against the Communist party, and then the actual execution of those threats by the banning of the Communist party, so that the privileges of party membership suddenly disappeared. Second, there was t alk about getting rid of all the old arrangements in the economy, so that those who were a part of the strictly economic elite--the directors of enterprises--were afraid that they were going to be thrown out or, at a minimum, not have the same privileged positions as before.

This was an excellent time to move forward with economic reforms. Unfortunately, very few countries did. There was a surge of enthusiasm, and the people supported governments that could remove the old interest groups and the old arrangements. This went ahead in Poland, the Czech Republic and others, though even there, I do not want to exaggerate how far it has gone; it still has a long way to go. The old economic elite was affected in one of two ways: either they were pushed aside, or they were forced to begin to behave like real capitalists. Since they could not be monopolists--because prices were deregulated, enterprises were broken up, and foreign trade was opened up to provide competition against monopolists--they began to be forced to behave like real capitalists. Many of them have stayed or even come back. That may be morally abhorrent, it may be unfair, but at least one no longer has the old arrangements, and there is the possibility of the efficient economic production that can be expected fro m more market-like arrangements.

In countries where reforms did not get started quickly and they did not go ahead with introducing price liberalization, competition, or privatization--like Ukraine--after a year or two the old elite suddenly discovered that there was nothing to be afra id of: they were still in charge. It was better than ten years ago, because Gorbachev had already eliminated tight central planning: there had already been a decentralization, so that while the patriarchs of the Soviet period had a lot of privileges, they also had responsibilities upwards. Now this responsibility was removed. They were much freer to do as they wished. They fairly quickly discovered, probably without reading Paul Samuelson's Theory of Economics, that there were ways in which their e conomic position could improve markedly from the previous Soviet period as long as that they made sure that there was a certain kind of economic policy.

The gradualist view, which states that one cannot move too quickly because it is too disruptive, is very good for the elite. This is a policy that says one cannot allow unemployment and therefore must have the central bank generate a lot of financial s upport, credits to farms and enterprises, and "reasonable" rates of interest, say, 1015%. The fact that 1015% interest when inflation is 10,000% a year is like paying you to borrow money, is further to the benefit of these individuals. And, of course, the re are many different ways in which these direct subsidies or subsidized credit could be diverted not to the benefit of the workers as a mass, but to the benefit of a small group of "patriarchal rent-seekers." They are careful enough to make sure the work ers have some minimal standard, because they need the support of the workers. But they also have opportunities to spin off commercial enterprises that do things like international trade, for the benefit of the country, or buy petroleum at $20 and sell it at $100. We know many instances of this happening in energy-starved Ukraine. In order to keep the workers happy, some of the foreign exchange is used to take the young boys on the collective farm who play on a local soccer team and send them to Italy. And it raises the patriarchs' status considerably.

Clearly, what is needed in terms of an economic structure is a relatively autonomous set of producing units which do not have the government on their backs telling them what to do, but which have the government quite willing to provide them financial s upport, to maintain and administer a regulated arrangement whereby prices are controlled. This is especially important in raw materials, because the opportunity to make profits by having a wedge between world prices and domestic prices is most important t here. Privatization, if it does occur, is done in such a way that it is easiest for the members of this newly founded elite to become the major shareholders in these companies.

In the case of Russian privatization, which has gone a very long way, there is no question about the numbers. I would not for a moment suggest disputing Mr. Chubais' figures on privatization in Russia. But it was done, quite intentionally and quite wil lfully, in the quickest way: through insider privatization. Those who are inside have the best access to the largest portion. This, of course, leads to what Yavlinsky has referred as a distorted transition process, moving not towards capitalism of the Wes tern variety, but towards a monopoly capitalism. And monopolization is precisely what rent-seekers love best, because they are the monopolists.

What about the people in all this? The people are very clearly fed a lie that leads them to the misperception that what they are seeing is markets. The story is, "You don't want to have shock therapy as in Poland or Russia; in Ukraine, we want to have a third way." Arguments about this "third way," and the "uniqueness" of Ukraine, are frankly almost laughable, revealing very little knowledge of what has been happening for decades in post-colonial Africa, or for centuries in Latin America. There is not hing unique about them whatsoever. It is absolutely archetypal that a small economic elite should freeze the situation in a quasi-market, quasi-administrative economy and benefit from that intermediate state.

Corruption is only the tip of the iceberg. What is really behind it is the rent-seeking activity. An anti-corruption campaign is not going to be effective--as it never was in Ghana or Nigeria or in any other historical case of trying to deal with corru ption by police tactics--unless one applies extremely tight police tactics, and then one can only reduce it to the degree that we saw in the Soviet Union. But we know that is not going to happen.

People are morally offended because they see capitalism is doing these nasty things. I am not suggesting, however, that it is morally abhorrent that the partocrats have taken over capitalism. That is not the problem. The problem is that they have monop olized capitalism for themselves and not allowed it for anyone else. The social contract in the central planning period was, "You are guaranteed jobs and a minimum standard of living, while we are guaranteed political control and a better standard of livi ng than you." The aim of a liberal open society in a market economy is that all are guaranteed an equal opportunity to make money. The industry and the state that we now have are ideal for this smaller group of people. The new social contract in post-Sovi et societies appears to be, "We are guaranteeing to the masses some jobs and a standard of living that is minimally adequate--unfortunately, lower than before, but that is not our fault--while we take the maximal opportunity to make money."

This creates the misperception that one is now in the market. That is one of the fundamental reasons why in the voting process in these countries there is a slant to the left, against markets. But if these elites were forced to deal with market prices and open economies, without special privilege access to credit in the central bank--if they were to behave as normal competitive capitalists--then the market process would sort out very quickly those who were good at it and those who were bad at it . It is to be expected that the transition process will not be completed soon. But it is proceeding far from smoothly. It has been frozen half-way, which is to the benefit of this patriarchal rent-seeking group.

How can things go in the future? There are two possibilities. One is that the leaders will really behave like the roving bandits of Olson's story, but in a modern version. I refer to these as the "packed-bag patriarchs." They are people who put money away in Swiss bank accounts or elsewhere and intend to leave before they are stopped. In that case, we may see economies being substantially reduced in wealth for a long time before these people leave. The other possibility is, as in Olson's story, that t he roving bandits will begin to see that they can actually do better if they become stationary bandits. That is what the frozen transition process is all about in most of these economies. Most of these people have seen that they cannot operate in the West with all of this capital, and they are really parking it abroad temporarily. This flight capital will come back, as it is already coming back to Russia, where you can use this money to privatize for yourself, to become an owner in the privatization proce ss. That is the second stage through which some economies may go, and Russia has already done so. Reform--from central planning to a full market economy-- requires three basic changes. The first is to stabilize the currency, the monetary relations, and br eak down inflation. In economics jargon this is called stabilization, avoiding hyperinflation. The second is privatization, taking state assets and putting them into private hands. The third, and I suggest the most important, is market liberalization: com petition, opening the economy to foreign competition, price liberalization, opportunities for everybody to begin a new business easily without having to have special privileges or to bribe somebody to sign a registration license.

The present patriarchal rent-seekers are likely to go along with the first of these changes. They also concede not only that hyperinflation ruins the economy, but that the economy is the goose that lays their golden eggs. They cannot allow it to deteri orate too much. They will therefore eventually say, "We can't continue with these loose credit hand-outs, we need to stabilize." And they will certainly realize that every time one tries to stabilize, one gets at least a few hundred million dollars from t he IMF.

We have seen the second step, privatization, go ahead very quickly where the old patriarchal elite has had the best access. But the third, market liberalization, they are going to fight tooth and nail, because it is the distortions in the market--price controls, the existence of non-competitive arrangements, restrictions on foreign trade--that provide the very core of their rents. Thus, I see no systemic reason for the political and economic elite to wish to agree to this third and final step of reform .

Is there a way to overcome this? Here again, I will borrow from Olson and suggest that there is, but only as an accident of history. If there happens to be another opportunity for a political change, that may provide another instance, as in 1991, where a supportive populace gives a mandate to a new person--a honeymoon period of a year or so--to move ahead very quickly with this third element, and break the basis of this patriarchal rent-seeking economy--not throw the rascals out, because there are too many of them, but simply pull out from under them the pillars of their monopoly capitalist rent-seeking activities.

I cannot avoid the temptation to point out a long-term historical analogy. If this new opportunity is not used by President Kuchma and his government to move ahead with reform and Ukraine remains in this frozen transition process, it will be the third time in the history of the Ukrainian nation that the narrow economic self-interest of an elite lacking the vision of long-term national goals, has undermined the economic strength of Ukraine and her overall potential as a truly independent nation. I am th inking of the Kievan Rus' princes as stationary bandits, fighting among themselves for the spoils and eventually ruining their land. I am thinking of the post-Pereiaslav Hetmanate, where the narrow economic self-interest of a large portion of the elite ma de it economically more convenient to be russified, and remain part of an economic elite, contributing to the dissolution of the state. The third time might be 1991, unless the opportunity is now taken to truly move ahead with reforms.

Our Man in Kiev
An interview with Robert Seely

Robert Seely was Kiev correspondent for the Times of London in 1991-1993 and a special correspondent for the Washington Post in 1993-1994. He has spent the 1994-1995 academic year as a Mid-Career Fellow at the Harvard Ukrainian Research Institute. This interview was conducted by Gleb Nechayev and Andrew Sorokowski on June 20, 1995.

GN: How did you become interested in Ukrainian affairs?

RS: I was working for the Sunday Mirror, a big national tabloid. I was quite young at the time -- 21 years old -- and I wanted to take an educational holiday. I was slightly bored with doing English tabloid stories. I thought I would go to the S oviet Union. I didn't know which part of the Soviet Union. I thought that Russia and the Soviet Union were one and the same. A friend of mine who was working for David Alton, a Catholic Member of Parliament, said, "Go to Ukraine--big religious demonstrati ons." The idea of religious demonstrations was bizarre to me. It's not the sort of thing you're going to find in a secular and liberal state. That took my interest. I was also doing a story on a western Ukrainian priest who had been sent to Chornobyl. The story never made it into the paper but it increased my interest even more. I went in April 1990 for a month. When I was there I decided to do some freelance work. I rang up all the papers. A lot of the Moscow correspondents were rather self-important and weren't interested in Ukraine because it wasn't the Kremlin, it wasn't Russia: it didn't ring a bell with them. The Moscow correspondents until recently didn't understand the nature of the Soviet regime because they lived inside the Beltway, so to speak. They lived in a world where without too much effort they could convince themselves that Russia was not a lot different from the West.

There was one excellent bureau chief, Mary Dejevsky, who worked for the Times: excellent Kremlinologist. She wanted me to work for the Times. I started working when there were big religious demonstrations in Kiev, big cultural demonstrati ons, and the formation of the Republican party. All this made news because it was just at the time when the newspapers had discovered what the republics were: people there weren't really Russians. In some cases, like Georgia and Central Asia, they were no t even Slavs. This was a big shock to everyone, not least to the people who worked in newspapers....Mary introduced me to the foreign editor of the Times, and he toyed with the idea of sending me back to Kiev permanently or sending me to Moscow. He decided to send me back to Kiev because I had been there. They offered me the job and said, "Do you want to go back there as our man in Kiev?" I thought about it for all of half an hour, rang back and said, "Yes I'll go!" So they packed me off there a fe w months later.

For the first two years of my time there I was very lucky because the Times team in the Soviet Union was the best out of all the newspapers. They had two people in Moscow, one in the Baltic republics and one in Ukraine. Even though I had been se nt to Ukraine specifically, because the Soviet Union really started from January of 1991 to fall apart with a vengeance, I found that half the time I was travelling: west Ukraine, southern Ukraine, the Caucasus, Armenia, Azerbaijan, Georgia, Moscow, over to Minsk, down to Central Asia. I was lucky that just the time I was there the fat lady was beginning to sing. It was a wonderful time. And it was fascinating.

AS: You gave a seminar at the Institute where you discussed how the international press deals with Ukraine. I believe you had some criticisms about press treatment of Ukraine. Could you elaborate?

RS: The important thing is that news is not necessarily something that is in newspapers. News events are events that take place. Sometimes they make the papers and sometimes they don't. That's not a criticism of journalists. It's just that like the res t of us, they're human. So one shouldn't take what appears in newspapers as gospel... I think the most important problem at the time in the coverage of Ukraine was that it didn't register in the minds of most people in the West. More importantly, it did n't register in the minds of news editors and foreign editors.

There were exceptions. The Economist was pretty good, the Financial Times was pretty good, and the Times wasn't too bad to the extent that they would use Ukraine as an example of how awful the Soviet Union was. I think the American papers were much slower than the British papers. The British papers had people in the republics by 1990 in some cases. The American papers didn't start doing that until 1992 in some cases. You're missing out on two years of crucial development.

GN: Could you elaborate some more on Western perceptions about what was going on in Ukraine at the time you were there, and how you perceived it?

RS: Firstly, most Westerners didn't have a perception. That was the problem--it didn't register in peoples' minds. Secondly, people did not see the Russian empire as an empire when it became the Soviet Union. I think that was the main basis of confusio n, that people saw this as a unitary state like the United States or Great Britain. As Margaret Thatcher said to the Ukrainian parliament in 1989, "I wouldn't recognize California. Why should I recognize Ukraine?"

They just didn't understand. Unless you were an expert--not only an expert but a "hawk" expert --the standard assumption in the West was that the Soviet Union was a Russian centralized state, that it wasn't an empire of peoples. So at a very basic leve l there were enormous misconceptions, even when Ukraine became independent. Diplomats, journalists from Moscow, lay people, "experts" in the West--they didn't treat these things seriously. We're now seeing the result, where from 1992 onwards, the American s decided to give Russia a free hand in the former Russian colonies, Soviet colonies, call them what you like, and rubber-stamped what has become an ongoing neo-imperialist drive by the Russians to reclaim those republics which declared independence and t o turn them into home rule republics.

GN: What do you think of Chechnya, and of what the West thinks about Chechnya? Do they have the same attitude towards Chechnya as they did toward Ukraine?

RS: They have a different attitude. People are slowly recognizing that Ukraine does exist and that there is a specific Ukrainian culture. What people don't understand is that Chechnya was once part of the Russian empire in exactly the same way Ukraine was--though later Chechnya did not have union republic status, so that legally there is no doubt that it is part of the Russian federation. The thing that the Russians haven't come to terms with is to find a balance that keeps Russia from falling to piece s, yet at the same time grants former colonies and very repressed peoples their rights. To fight them and to bomb them is just going to alienate more people. Chechnya could be the best thing that happens to Russia or it could be the worst thing that happe ns to Russia. It's too early to tell.

AS: You have suggested that the forces of religion and nationalism, which are strong in Ukraine and indeed, strong in Chechnya, sound strange to the Western ear, perhaps because religion and nationalism aren't important to the average western Europe an or American.

RS: Nationalism is misunderstood. In Europe, people think we are getting away from nationalism, and to a certain extent we are, but it's a very slow process. Nation-state building in Europe took hundreds of years. The first development was in England w ith Henry the Eighth. Then the French caught up and gradually nationalism spread. Most nation-states in Europe only achieved their nation-statehood in the nineteenth century, whereas throughout the world it is essentially a post-war development. So for a small part of western Europe--Britain, France and maybe Germany, whose idea of nation-state was discredited by the Nazis--the nation-state may be slightly on the wane. For the rest of the world it is a big business. It's a growing business especially in e astern and central Europe, which had a very different history than western Europe. I don't think people understand that.

The idea of the nation-state has always been discredited because it was anti-universalist and allegedly--I don't agree with this at all--it was perceived as being proto-fascist. What the collapse of the Soviet Union and the collapse of the European emp ires in the post-war era have shown is that nationalism is an organic development. It's just an idea of an enlarged community. The history of community is from family to village to town to region to nation and maybe continent. The jump from national ident ity to continental identity is only happening in about half a dozen countries in the world. It's going to be a process that takes at least a hundred years.

GN: Do you feel that in the journalistic world, or in the societies that you are familiar with in general, there is a hostility to the notion of Ukrainian independence or Chechen autonomy?

RS: There's a snobbishness. Ukrainian culture has no resonance in the West. Secondly, Russia has always been very appealing to romantics who don't think enough and people who come to Russia via culture and not politics. Again, nationalism was also disc redited in the West to a certain extent--in western Europe, certainly amongst western Europe's left-wing intelligentsia. Ukrainian statehood is an uphill battle, but every little bit counts and every day Ukraine survives and every day it wins medals at Ol ympic events or gets its team into the European Cup or the World Cup and sends diplomats abroad and gets businessmen to come in to Ukraine. That idea will be strengthened. The idea of an Italian nation was laughed at for a long time even after it was crea ted. Likewise people still laugh about Belgium even today, and I don't blame them.... The only way that Ukrainians are going to have to deal with that is to take the necessary steps to become a highly productive modern secular nation built on regional but enlightened Christian and secular values--basic tenets of morality plus the secular veneer that states have nowadays. It's going to be a long-term process and the more slowly the Ukrainians do it, the more people are going to not take Ukraine seriously.< /P>

GN: In your seminar you made an interesting statement about how the Western media try to cover topics that are "sexy," that sell, such as Nazis in western Ukraine, the Black Sea Fleet, or Chornobyl...

RS: I'll give you two examples of that. The Western press will gasp in horror every time a proto-fascist is elected to a position of authority, yet they regard the election of proto-socialists as normal. I can't quite see the difference myself. One is as horrendous as the other as far as I'm concerned. One is as counter-productive as the other. People automatically associate proto-fascism with the horrors of Nazi Germany. I don't see why people don't associate proto-socialism with the horrors of Soviet totalitarianism. I think there are very complex and deep historical reasons for that. Secondly, the Chechen war has been all over the front pages, which is why I'm writing a book on it at the moment. But how many refugees have been created in Chechnya? A few hundred thousand. How many refugees were created in Abkhazia? It certainly runs into six figures, but that may have made a few stories in the Sunday New York Times and that's about it. Because the Russians weren't involved, it came down low in the list of priorities.

GN: What are the reasons for that?

RS: You didn't have the Russians fighting. You had the Russians fighting, I'm sure, but you didn't have the Russian flag stuck on tanks and artillery pieces, so it became less important. Those competing for power in Russia have often fought their battl es on the peripheries of their empire, and the battle of Abkhazia was important in the effect it had within the Kremlin, in the same way that Chechnya did. Chechnya was a bigger story, but the reason why it has got undue or very large amounts of coverage, while Abkhazia or the Georgian civil war or Transnistria got very small amounts of coverage, was that the Russians were directly involved rather than indirectly. Yet in practical terms the results were often quite similar.

AS: You were in Chechnya recently. What in particular struck you there?

RS: For better or worse, I went to most of those conflicts in the former Soviet Union. They're all pretty horrible and they're desperate, miserable events. I was struck by a couple of things. When ethnic groups first started fighting amongst themselves , often with encouragement from Moscow, they did so using barricades and old 1920s carbines. But the breakup of the Soviet Union and the growth of this very powerful arms industry, which the Russians have no intention or ability to control, has meant that the wars have become more and more vicious and destructive because the sides have become better and better armed. You saw it in Chechnya primarily because the Russians took their own men into battle rather than just giving tanks and artillery pieces. But the early days in the Karabakh were very different from the early days of the Abkhaz war. The Georgians went into war with a lot of heavy armaments. The number of amputees in the Abkhaz war was much, much higher than in the first two years of fighting in the Karabakh. It was much more bloody. There is weapons inflation. The arms industry is either not controlled, or controlled by people who are willing to send armaments to breakaway groups. The Chechens have gained by that because they have got so much i n armaments from the Russians themselves, and I don't doubt that Russian commanders were selling armaments. The reason the Chechens were able to fight was not only because there was a lot of criminality in Chechnya, but more importantly because Russian co mmanders were willing to sell tanks and APC's and grenade launchers if the price was right. The price was always right.

GN: Could you tell us a bit about the book you are writing?

RS: When I came back, I gave a couple of seminars on the Chechen war. I had a call from a professor at Brown University, who is dealing with the Caucasus, and he asked me to write a book with him on the Chechen war. I jumped at the chance. The book is going to be coming out in the second half of the year, in October-November. It obviously centers on the relations between the Russians and the Chechens, and while it's concentrating on the Chechen war, one of the prime arguments is going to be how these e vents on the peripheries create enormous damage and enormous influence in the Russian center. So you're not only talking about changing the course of history in a place like Chechnya, but you're also changing the course of history in the Kremlin. The Ingu sh, the Chechens, the Ossets, and also larger groups like the Ukrainians--they've all been caught at various times in the history of the twentieth century as pawns in a game for the Kremlin by conservatives or liberals. One of the things that struck me wh ile researching this book was the way in which many of the Caucasian groups and Moldavians and Ukrainians were used in the battle firstly between Gorbachev and the Supreme Soviet, then between Gorbachev and Yeltsin, then between Yeltsin and the Russian pa rliament, then between the Russian government and the Russian presidency. They've all been used in games fought out by the Kremlin beyond the boundaries of Moscow. There are several examples from 1990-1995. The four groups that I mentioned--Gorbachev, Yel tsin and the two parliaments--fought at separate stages with each other, making policies contradictory to ones they'd previously supported in order to destroy their opponents in Moscow.... The politics of both republics as well as the lives of hundreds of thousands of people were dependent upon the conflicting hates and desires of competing factions and individuals within Russia. That's an extraordinary way to play with history. We also hope to show that the Russians have always been incapable of coping i n any logical way with the clash between Christianity and Islam, with the clash between the Caucasians and the Slavs. They have been unable to disengage from empire, and there are significant factions in Russia that are still incapable of doing so. If R ussian history goes well, Chechnya is going to be the last post-imperial war; if it goes badly, then there are going to be quite a few more Chechnyas.


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Sabre Foundation, Inc., a non-profit organization providing educational materials to the former Communist Bloc, is compiling a "Ukraine: FAQ+" ("frequently asked questions") information repository at its World Wide Web site. Ukraine: FAQ+ will include each successive issue of Perspectives on Contemporary Ukraine. Sabre's Web site is located at For further information, contact Ms. Rebecca Schneider at


Edward L. Keenan Celebrates Sixtieth

Professor Edward L. Keenan was feted on the occasion of his 60th birthday with a dinner at the Harvard Faculty Club on May 15. The Andrew W. Mellon Professor of History, he is a member of the Standing Committee on Ukrainian Studies. At the dinner Profes sor Keenan, who is co-Editor of Harvard Ukrainian Studies, was presented with a mock-up of the upcoming Volume XIX of that journal, which will constitute a festschrift in his honor with contributions by some 36 students and colleagues.

Ukraine's Jewish Sites

On May 4 Dr. Yohanan Petrovsky gave a slide show and lecture on "Jewish Sites of Ukraine." Dr. Petrovsky teaches at the International Solomon University in Kiev. Held at the Reisman Center for Harvard-Radcliffe Hillel at Rosovsky Hall, the presenta tion was sponsored by the Harvard University Center for Jewish Studies, the Reisman Center, and the Ukrainian Research Institute.

Lanovyi Assesses Market Reforms

On May 12 Volodymyr Lanovyi, a leading member of Ukraine's parliament, former first vice prime minister, and a noted economic reformer, spoke on "Market Reforms and Business Opportunities in Ukraine." Sponsored by the Ukrainian Research Institute and t he Project on Economic Reform in Ukraine, his talk was given at Harvard's Kennedy School of Government. Among the topics of the lecture and ensuing discussion were Ukraine's declining industrial production, relations with Russia and Europe, capital accumu lation, relations between the government and parliament, privatization, tariffs and taxation. Afterwards, Mr. Lanovyi visited the Ukrainian Research Institute and met with faculty, staff, and associates.

Mr. Lanovyi, who is also president of the Market Reforms Center in Kiev, was visiting the U.S. as a guest of the Demczuk Foundation and the National Endowment for Democracy. He will be spending July and August in Cambridge as a Fellow of the Ukrainian Research Institute.

Kiev Philology Dean Pledges Cooperation

Professor Mikhajlo K. Najenko, Dean of the Philological Faculty of Kiev National University, visited the Ukrainian Research Institute on May 18. He spoke to faculty, staff and students on "Literary Scholarship in Ukraine in the Last Five Years," illus trating his talk with a variety of recent publications. At the beginning of his presentation, Dr. Najenko signed an agreement of cooperation between his Faculty and the Ukrainian Research Institute, represented by its Director, Professor George G. Grabowi cz.

Seminar in Ukrainian Studies
March-May, 1995

March 16: "Russian Administration and Nationality Problems in Right-Bank Ukraine, 1890-1914"
Witold Rodkiewicz, Ph.D candidate, Department of History, Harvard University

March 23: "Understanding 1919: New Perspectives on Jews and the Ukrainian Revolution"
Henry Abramson, Post-Doctoral Fellow, Yeshivat Ohr-Samayach, Monsey, New York

April 6: "New Vistas for Ukrainian and Russian Archives: Maximizing Information Access"
Liubov Dubrovina, Director, Institute of Manuscripts, Vernads'kyi Central Scientific Library (TsNB) of the Ukrainian Academy of Sciences
Lada Repulo, Docent, Moscow Archival Institute, Russian State University for the Humanities
Patricia Kennedy Grimsted, Associate, Ukrainian Research Institute, and Fellow, Russian Research Center

April 13: "The Iconography of Heavenly Jerusalem in Byzantine and Rusian Art"
Alexei Lidov, Director, Center for Eastern Christian Culture, Moscow, and Visiting Member, Institute for Advanced Study, Princeton University (co-sponsored with the Department of Fine Arts)

April 21: Petryshyn Memorial Lecture: "New Nation, New Relations: Ukraine's Emerging Foreign Policy"
Yuri M. Shcherbak, Ambassador of Ukraine to the United States

April 27: "Shakespeare's Sonnets in Ukrainian Translation"
Iraida Lohvyn, Assistant Professor, Kiev National University, and Visiting Scholar, Department of Linguistics, Harvard University

May 9: "New Configuration of Political Forces in Ukraine and Its Implication for Ukrainian Foreign Policy"
Olexiy Haran', Associate Professor, University of Kiev Mohyla Academy, and Fulbright Fellow, Harriman Institute, Columbia University

May 18: "Literary Scholarship in Ukraine in the Last Five Years"
Mikhajlo K. Najenko, Dean, Philological Faculty, Kiev National University

The editors of Perspectives on Contemporary Ukraine would like to express their appreciation to the Coordinating Committee to Aid Ukraine, Inc. for its support.

In Upcoming Issues of Perspectives:

Victor Perebenessyuk, The Potential for Conflict in Ukraine
Henry Abramson, Ukrainian-Jewish Relations
Prospects for Privatization in Ukraine
1995 Ukrainian Summer School




Andrew Sorokowski, Editor
Gleb Nechayev, Associate Editor
Sheila Kelly, Assistant Editor
Olga K. Mayo


George G. Grabowicz
Roman Szporluk
Lubomyr Hajda

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