Russian capitalism on the ropes

Copyright: Iskra Research; By F. Kreisel; May 27, 1998

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Yesterday's news that the Russian government could not find a buyer for Rosneft has panicked the already nervous Russian stock exchanges. On May 27th the stock prices dropped over 10 percent as crazed investors tried to convert their shares into dollars. The Central Bank had already spent over a billion dollars the previous week trying to defend the rouble exchange rate. It spent another 200 million today, but was also forced to jack the refinancing rate to a 27 month high of 150 percent and the bond yields shot up to 80 percent. These rates guarantee a collapse of any capitalist, i.e. driven by market and profit, production and a further disintegration of the real economy.

It should now be obvious that the much advertised "Russian economic recovery" was a cruel joke played on the Russian masses by the oligarchs grouped around Yeltsin. These mafia-type chieftains in alliance with the ex-Stalinist apparatchiks made a killing by stealing and selling off the state assets of the overthrown workers' state, but they could not transform the Russian economy into a going profit-making concern. The mirage of Russian recovery could not survive for long, especially in view of the economic collapse playing itself out among the so called "tigers" of East Asia. The recent IMF mission to Moscow left town without agreeing to continue lending money to the Yeltsin clique. It might return in view of the present crisis and provide some emergency support. But it can hardly stave off the expanding economic and social collapse.

The collapse of the East Asian "miracle" has scotched all hopes of a capitalist road of development. But we have always maintained, and the collapse of the Soviet Union proved it, that there is no national road either. It is our contention that only a program of international socialist revolution offers the way forward.