Capitalism hit the former Soviet Union very hard in the 1990s. That was the Boris Yeltsin era of “shock therapy” wherein the economic ideas of Larry Summers, Jeffrey Sachs, and others transformed the countries of the former USSR from state-dominated economies with capitalist elements to the capitalism of the wild, unregulated sort. The results of such a severe and rapid transition were disastrous for these countries, socially, politically, and economically. The ramifications of those years are still felt throughout much of the former Soviet space today, both directly and indirectly.
In Russia itself, the “shock therapy” brand of capitalism was implemented with aid from American advisors such as Sachs and by “democratic” Russian “reformers” like Yegor Gaidar, Anatoly Chubais, and others. Their subsequent “reforms” plunged approximately 75% of Russians into poverty and reversed many of the country’s hard-won 20th century achievements, becoming, in the words of Russian scholar Stephen F. Cohen of NYU, “the first nation ever to undergo actual demodernization in peacetime.” It changed public perceptions with regard to the West. If there were many Russians in 1991-92 who were supportive of the basic idea of having democracy, the years of “shock therapy” created a desire for much-needed “stabilnost” and caused many to view the West as primarily responsible for such a terrible economic catastrophe.
Similar rapid transitions to market economies occurred throughout the former Soviet sphere, leaving legacies of entrenched oligarchies, monopolies, economic disparity, poverty, bad business environments, and most of all, corruption. For the citizens of former Soviet states like Ukraine, Georgia, Moldova, and Armenia, the EU and its Eastern Partnership program appear to be effective remedies to finally “cure” their economies of these diseases once and for all. The reputation of the EU for its rules, regulations, and carrot-and-stick initiatives seemed to be a cure-all solution to many.
“Like hopeless alcoholics, we are trying to toss ourselves into a rehab, where caring Europeans will cure us from the addiction (in our case – corruption),” wrote the Armenian comedian Sergey Sargsyan. Indeed, corruption remains a very serious problem for all four of the Eastern Partnership states that sought deeper ties with the EU, with Georgia ranking 55, Armenia 94, Moldova 102, and Ukraine 144 on the 2013 Corruption Perceptions Index of 177 countries (CPI) by Transparency International. The issue of corruption is especially serious in Ukraine where the oligarchy and the political elite, from Tymoshenko to Yanukovych, have robbed the country and its people into bankruptcy. Consequently, the EU is viewed as a panacea, a “symbol” for the hope of a better future. In the words of Mark Adomanis and Luka Orešković with regard to Ukraine specifically:
Given Ukraine’s omnipresent corruption, the lack of legal security and, most importantly, the country’s economic implosion, it is not surprising that many citizens would latch onto a symbol (“Europe”) that is associated with all of the things that the country itself lacks. Throughout Ukraine, Europe is popularly identified with economic prosperity, transparency, democracy, and the rule of law, with the possibility of living a “normal life” of dignity and material security.
In contrast to the EU, the Moscow-backed Eurasian Union at face-value appears to offer little, especially with regard to combating corruption. With a CPI ranking of 127, corruption is widespread in Russia, though the Kremlin does realize the gravity of the issue and has been trying to fix it in recent years. Still, the continued presence of corruption combined with oligarchic monopolies, has likewise made opportunities for independent businesses and entrepreneurs very difficult. Together, these issues stifle real economic growth and potential and pose a serious challenge to competition, innovation, and entrepreneurship. Additionally, the fact that much of Russia’s economy is also based on non-renewable natural resources has also raised very serious concerns.
“The main reason why many Armenians are not crazy about joining the Russian Customs Union is not the Russian people, culture, literature, or cuisine,” wrote the Armenian comedian Sergey Sargsyan. “The problem is corruption.”
Despite this, Russia is remarkably holding its own. The Kremlin managed to pay off much of its foreign debt from the 1990s. Moscow’s economy is also currently growing much faster than that of the EU. Additionally, the birthrate of the once “dying Russia” has also bounced back and is on the rise, not only in national autonomous republics like Chechnya, but also deep into the Slavic Russian heartland as well.
Still, is the EU a viable alternative solution to these countries’ economic woes? It is true that the Europeans would undoubtedly implement their rules, regulations, and carrot-and-stick reforms on these countries. However, by placing their hopes on the EU, which is still limping along from the devastating 2008 Eurozone crisis, these countries are staking their fate on a supranational union that cannot bring them any serious promises of lasting economic prosperity and stability. In November 2013, the noted American Economist Paul Krugman wrote in The New York Times that his…
…joke slogan for Obama has been, ‘It’s not as bad as the Great Depression!’ But Europe can’t even claim that. At this point it’s just as bad as the Great Depression — and where European economies were recovering strongly by this point in the 30s, they’re stalling now. Doing worse than the 30s; that’s a remarkable achievement.
Indeed, by investing so much hope in an entity as economically unstable as the EU, the people of the ex-Soviet states “run the risk of being sorely disappointed with their ‘civilizational choice’” in the manner that ordinary Russians were sorely disappointed with capitalism in the Yeltsin era of the 1990s. There is also no guarantee that the corruption issue has been completely solved either. In Bulgaria and Romania for instance, corruption remains particularly widespread. Even more interesting, according to the 2013 CPI report, non-EU member Georgia actually ranked higher on transparency than not only Bulgaria and Romania, but other EU members such as Croatia, the Czech Republic, Slovakia, Italy, and Greece. Meanwhile, Armenia and Moldova rank higher than prospective EU member Albania! Further, according to Adomanis and Orešković:
The three most recent entrants to the EU (Bulgaria, Romania, and Croatia) have performed terribly since the onset of the financial crisis. Croatia, in particular, has seen no economic growth for the past seven years. After many years of painstaking reform, per capita incomes in these countries are still less than 40% of West European averages. Even more alarmingly, these three countries have almost entirely stopped converging with the “old” EU members in the West.
In spite of all this, both politicians and citizens in the former Soviet Union seem completely sold on the vision of the “European paradise.” At Ukraine’s Maidan, some activists even believed that “in Europe there is no police brutality.” Apparently, they have never been to Greece, Spain, Portugal, Italy, Bulgaria, or France.
Joining the EU at this point will likely not bring about the long-desired dream of economic prosperity. In fact, it could become potentially destabilizing, especially for a country as large and diverse as Ukraine with an economy that, if not near bankruptcy, is already bankrupt. That said, as unrest continues in Ukraine, ordinary Ukrainians must consider the question, “should we rely on the EU to help us out of our situation, or is up to us, the Ukrainians alone, to create a better future for ourselves?”