- 7 weeks ago
Hedrick Smith follows up on his 1990 series Inside Gorbachev's USSR by reviewing how post-Soviet Russia is handling newfound freedoms while dealing with financial struggles.
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00:01Frontline is a presentation of the Documentary Consortium.
00:07Tonight on Frontline, a report on the bitter fruits of change in the former Soviet Union.
00:14At least give him a carton of milk, he's an invalid.
00:20They give us something abstract. Freedom, democracy, glass-nosed.
00:27But what are we supposed to do with that freedom?
00:31Correspondent Hedrick Smith revisits the country he has chronicled over two decades.
00:37Two years ago, we were so full of strength, energy and plans, we thought we had only to take power and it would all work out.
00:46Tonight, after Gorbachev's USSR.
00:49With funding provided by the financial support of viewers like you.
01:00And by the Corporation for Public Broadcasting.
01:07This is Frontline.
01:09I first came to Russia twenty years ago as a reporter for the New York Times.
01:29For most of those years, this seemed a society frozen in time.
01:36But then, a few years ago, I witnessed the unbelievable.
01:42I was here then to shoot a series of films for public television.
01:47The transformation began with Glasnost, folk singers on Moscow streets mocking the mighty, tasting the new freedom.
02:00A freer press, open political debates, and the right to assemble and to protest.
02:08Now I'm back.
02:15And the old system, the party, the union, the ideology, have all collapsed.
02:22And from the ruins, Russians must now forge a new society.
02:29New ways to make their economy work.
02:32New ways to relate to each other.
02:34I came to see what all this means to the daily lives of my old friends.
02:41I begin in Ivanova, an industrial city 150 miles northeast of Moscow.
02:50My thoughts flash back to my first visit in 1989.
02:54I was secretly told I must visit the Vedensky church, shut down by Stalin in the 1930s.
03:04Of the Jews, the Christians, the Christians!
03:05The Jews from the Third Н眠.
03:06The Jews from the Third Church will ask the
03:07claim that the Jews from the Third Church did not be abandoned.
03:09And when the Jews from the Third Church were granted to the Third Church?
03:11The Jews from the Third Church did not be abandoned.
03:14Yes.
03:15And that's with the third church, the church and a closed church.
03:17Yes.
03:18And in the sixtried church?
03:19Yes.
03:20And so, how long did the church have been abandoned?
03:21The The Fourth Day?
03:22The Fourth Day?
03:23The Fourth Day.
03:25Announcing a hunger strike from the 21st of March.
03:29We will neither eat nor drink until the opening of the Red Church.
03:33who were prepared to die for the motherland of the first Soviets.
03:53When I left Ivanova in 1989,
03:56the strike had ended after the city offered to talk.
04:03This winter, I came back to see Larissa and Rita on Christmas Eve.
04:12The man who had opposed the hunger strikers was Anatoly Golovkov,
04:37then the communist mayor.
04:40I wanted something different in that church,
04:42not services and rituals, but a museum, say, of church relics.
04:48Or someone had the idea of turning it into an organ recital hall.
04:55That's why I fought with them.
04:56I have heard there is an interesting development in the family.
05:05His teenage daughter Katya tells me she plans to attend tonight's Christmas Eve Mass.
05:15For half a century, no services were held in this church.
05:20The priest has to teach the people unfamiliar rituals.
05:23I am struck by how many young people have come tonight.
05:27In the country, in Russia, no God has no life.
05:33No, no, no, no, no.
05:36We cross the right hand again.
05:39Once again in the name of the Father, the Son and the Holy Spirit.
05:44When we sleep, we wake up.
05:47Thank you for the past day.
05:50I didn't see my friends, Larissa and Rita, in the big church.
06:06They're here.
06:07They have moved on and reclaimed this chapel
06:10that has long been closed.
06:11Tonight, they're celebrating its first service.
06:20Russia's religious revival means more than ritual and worship.
06:49It is a renewal of Russian culture and tradition.
06:56It symbolizes the return of a people to their roots.
06:59Ironically, a return to Russia's roots offers poor nourishment
07:26for today's economic and political reforms.
07:30Pre-revolutionary Russia had little tradition of democracy and free enterprise.
07:36Modern Russia will have to invent itself.
07:39In the spring of 1989, I remember watching the man who defied the odds, Gorbachev.
07:50I watched him tentatively introducing democratic reforms to the First People's Congress.
07:55It was a time of euphoria, but Gorbachev was taking the country on an uncharted and perilous path.
08:11He was pushed to move even faster by young Democrats like Sergei Stankiewicz,
08:16a student of American democracy.
08:18Sergei was a man of the people.
08:34After a Congress session, I walked with him to Pushkin Square,
08:39where a crowd had gathered to support radical reformers like Boris Yeltsin and Stankiewicz.
08:44This winter, I revisited Sergei.
08:58He's a man in power today, a political advisor to President Yeltsin.
09:03He sports a double-breasted suit.
09:07I remember very well that night after the first day of the Congress of People's Deputies.
09:11We walked into the crowd.
09:12Do you mingle with the crowds now?
09:15I also have to do it from time to time now, but it's tremendously difficult.
09:21I prefer not to take risks to go to the shops when people are standing in alliance.
09:29It's impossible already.
09:31What happens when you say it's impossible?
09:33What happens?
09:34Well, I'm afraid that the discussion will be too sharp in that case.
09:39Is it dangerous for you personally, physically dangerous?
09:42Oh, yes, sometimes yes, sometimes yes.
09:44Can you give me an example? Have you had that happen?
09:47No, I prefer not to make experiments.
09:48This is the scene Sergei is avoiding.
09:55This is the famous Yelosayevsky store for years of food mecca for Muscovites.
10:01Only now their pilgrimage has turned bitter.
10:05After Yeltsin's government lifted price controls on most foodstuffs, prices shot up overnight,
10:10some as much as six-fold, almost no one is buying, everyone is angry.
10:17Yeltsin hopes to put food on those shelves by freeing up prices.
10:42He reasons that if farmers earn more, they'll produce more.
10:46I wonder if this will work, and I think I know whom to talk to.
10:51In 1989, in the farming country near Yaroslavu, about 250 miles north of Moscow,
11:10I met Dmitry Stardubsev, director of a 20,000-acre state farm.
11:15Stardubsev was one of the best in the Soviet system.
11:21He was a smart, progressive manager who ran a successful farm.
11:25He was known as a rebel, a reformer, fighting the communist bureaucracy.
11:32His farm reminded me of a boarding school.
11:36Housing and food were provided.
11:38His people worked hard for him.
11:40Stardubsev ruled his kingdom like a benevolent czar, and he lived like a country pasha.
11:53When I returned this winter, I found Stardubsev feeling pressure from the Yeltsin government
11:58to break up and privatize his state farm.
12:01We began our visit with the ritual of the Russian banya.
12:11Stardubsev, the old reformer, now worries that reform will pull the rug out from under him.
12:25Stardubsev throws a royal dinner for me.
12:27Obviously, he didn't shop in Yeltsin government.
12:30As we talk, I realize that Stardubsev has become a defender of the old economics.
12:40With his socialist kingdom under assault, he has a lot to lose.
12:46He makes vicious attacks on Gorbachev, blaming him for ruining Russia.
12:51The Russian land, the evil of Gorbachev, does not accept his actions.
12:58He does not accept.
12:59He just was an agent of other countries.
13:06That's very important.
13:07That means, the CRU?
13:09Well, the English newspaper wrote that he was a servant in England.
13:16One subject Stardubsev avoids.
13:22His brother Vasily is in jail.
13:25He was one of the eight leaders of the failed coup last August.
13:28The two PC's that we had to come and talk with our people.
13:31The next morning, I asked Stardubsev to take me to the farmer's market in town.
13:43I want to talk about prices.
13:45On the way, he admits that he and other state farm directors
13:49have gotten together to fix high prices on dairy products.
13:55He knows it's hurting people.
13:56He knows it's hurting people.
14:26Stardubsev and the other state farm directors are making a tidy profit from their price increases.
14:45But they're not moving more goods into the market.
14:50To protect their prices, they're keeping supplies scarce.
14:53Here's what you arestered about now.
14:55I'm stuck with our house in a garage.
14:57Where's the house in a house?
14:58Where's the house in a busy week?
15:00Where's the house in a bisschen?
15:01One, two, three, three and one.
15:03You both know what's happening.
15:07Your sister says something.
15:09In a while, you've been workingisselled?
15:11Come on, huh?
15:12What's Waldoin essa?
15:14offer traffic and that Altered his camera,
15:16cookumes, enjoy some
15:17And that is the Nicolas dessa.
15:18To get into Easter as shown
15:19How much money is worth it?
15:20200 rubles.
15:21You can't do it.
15:2240 rubles a bag.
15:24When did that happen?
15:26180 rubles to 200 rubles.
15:29You're not going to die.
15:32You're taking my last shoes.
15:34I have to go and get you.
15:37I say we won't survive until we live as much as we live.
15:41We'll die.
15:42We'll die.
15:44Stardustev tries to divert people's anger from himself
15:49by suggesting they protest to the Yeltsin government.
16:01But as a concession, he tells his own salespeople
16:05to cut the price on his farm's cheese by one ruble.
16:15As I watch Stardustev operate, I wonder,
16:19who could effectively compete with the state farm cartel?
16:32Stardustev tells me there is a successful private farmer
16:36living not far from town.
16:38I know private farmers are a rare breed.
16:41There are several million farm workers in Russia,
16:45and only 40,000 have dared to risk operating their own farms.
16:54Here they are, two long-time rivals,
16:56Alexander Yozhikov, the private farmer,
16:59and Stardustev, the state farmer.
17:02When Stardustev worked here on the collective farm
17:06as deputy in charge of production, he wouldn't give me land.
17:09So I took it to the courts, and we fought so hard.
17:12Where is your land now, I ask?
17:15Can you believe it?
17:16They gave me land 20 kilometers from here.
17:20But despite all the hardships, I work 15 hours a day.
17:24I'm a happy man.
17:26Yes, a real farmer like me.
17:28I'm not a renter.
17:29Everything here is mine.
17:30The livestock, the machinery, it's all mine.
17:33What's mine?
17:34What's mine?
17:36Stardustev must be wondering what would happen to his monopoly
17:39if all his workers became farmers like Yozhikov.
17:45For now, Stardustev has the big advantages.
17:49Yozhikov desperately needs to buy feed grain,
17:51but Stardustev refuses to sell.
17:54He is in a better situation than we are,
18:03but if the government would only change its attitude toward agriculture,
18:07then we would all be able to work better.
18:12I don't want to brag, but if I had a mechanized farm,
18:14of course I could work well.
18:16Yozhikov complains that state farms like Stardustev get regular government subsidies,
18:27but private farmers cannot even get credits or government loans
18:30to buy the grain and farm machinery they need.
18:34I tell you, gentlemen, one thing.
18:38All over the world, agriculture exists on government subsidies to some extent,
18:43just like U.S. farmers get subsidies.
18:50Despite the handicaps, Yozhikov is proud of his independence,
18:54and he can point to results.
18:57Just before I arrived, he signed a big contract
19:00to supply a local factory with meat and milk at low prices.
19:04In return, the factory will build him new barns and grain sheds.
19:13Stardustev may be against private farmers, but he's not against making a profit.
19:23Back at his state farm, I learned that a young man who once taught judo here
19:28had made a small fortune as a private wholesale trader in Moscow.
19:32He's come back to see if he can make a deal with Stardustev.
19:35Last year, Stardustev was given a bag of potato chips from Switzerland,
19:40and he's been dreaming ever since of building a chip factory on his farm.
19:45But he needs Western machinery.
19:48The trader, Sergei Bobrov, claims he can get hard currency for the project.
19:53But before the two men can discuss the potato chip deal,
20:00they get hung up in an argument over privatization.
20:04I'm for the market, but I'm against unconsidered reforms.
20:08You have to think it through, weigh the pros and cons.
20:12The Soviet people have had to put up with enough mistakes since 1917.
20:16No, I don't think we've been given enough freedom.
20:23Many businessmen have money, but they're afraid to invest in industry or a business like this
20:31because they aren't sure that the land or the factory will be theirs.
20:35They're afraid tomorrow some bureaucrat will show up and say,
20:40excuse me, but the land isn't legally yours.
20:47You don't have to do everything fast.
20:50Issues should be well considered.
20:52Everything should be voluntary, not forced.
20:58It was hard for me to see how these two men could work together.
21:02They were worlds apart.
21:05Stardustev talks the old politics of welfare socialism.
21:08Bob Roff talks the new economics.
21:13They have to give us everything right away.
21:16Land, turn everything into private property.
21:19If we don't solve the pricing problem, the people will explode.
21:29As I left Stardustev, I concluded that he might make a few business deals,
21:35but he's certainly no big help to Yeltsin.
21:39Next, I went to the edge of Siberia, 2,000 miles east of Moscow.
21:53I wanted to see how industrial workers and managers at the legendary Urlmash machine plant
21:59are coping with their new freedom.
22:01In the winter of 1992, the factory square is dominated by New Year's decorations, a sign of change.
22:09Even the name of the city has changed from Sredloft to Yekaterinburg.
22:16When I was here in 1989, a huge billboard still carried a propaganda portrait of a Soviet hero worker.
22:25Two years ago, Igor Stroganov, the general director of Urlmash, told me he was caught in a squeeze.
22:43Gorbachev promised him autonomy, but Moscow ministries clipped his wings.
22:50They fixed his prices, decided his wages, picked his customers.
22:58When Stroganov wanted to turn a profit by producing small excavators for export,
23:04Moscow insisted he make big machines for domestic use, even at a loss.
23:09It was catch-22.
23:15Like this, right? Well, thank you.
23:21He left.
23:27Last November, Stroganov died of a heart attack.
23:31A very frustrated man.
23:32Now his deputy, Boris Kotelnikov, sits in his chair as acting director.
23:39For seven years, Stroganov told me, you and I have lived soul to soul, as Russians say.
23:47Let's get through these tough times together, and then we'll see.
23:51Today, Urlmash feels abandoned.
23:54The state still owns the factory, but the state no longer guarantees supplies of metal and industrial components.
24:03Or even customers.
24:05One large section of the plant is idle.
24:07We're almost done.
24:08We're done.
24:09We're done.
24:10We're done.
24:11We're done.
24:12We're done.
24:13We're done.
24:14We've done it.
24:16We're done.
24:18We've done it.
24:19There's no new orders?
24:20There are no new orders?
24:21There are no new orders.
24:23There's a serious situation.
24:27According to individual orders, there's no wood for us for 5 or 6 months.
24:31They don't give us wood, we can't make a deal.
24:34We've stopped the tanks.
24:35This is the Ural-Mash factory in Yekaterinburg, formerly Sverdlovsk.
24:54Ketelnikov is on the phone with one of his Ukrainian suppliers,
24:59who stopped shipping orders after Ukraine declared his independence last December.
25:03The breakup of the Soviet Union is playing havoc with the Russian economy.
25:08The Ukrainian supplier tells Ketelnikov that pipes shipped to Ural-Mash were stopped at the Ukrainian border
25:14and sent back under the policy of President Kravchuk.
25:19What does Kravchuk say now?
25:22Ketelnikov has to adapt to survive, to find his own suppliers and barter his output for theirs.
25:28Things are awful here, just awful.
25:33We have 1,500 suppliers of basic materials who aren't sending us anything at all.
25:40Only barter.
25:41But what can we barter with?
25:43Cut off a piece of pipeline or trade a spark plug?
25:47To me, barter sounds like a halfway house from state socialism to capitalism.
25:52But it's inefficient.
25:55Ketelnikov cannot always get what he needs.
25:58Look at this small part.
26:01It's a condenser.
26:04It used to cost 19 kopecks.
26:08Without this condenser, a 3 million ruble machine won't work.
26:11Before, we got them from the Baltic states, but now we don't.
26:19We used to get them from other factories, but now we don't.
26:26So we've completely halted production over these cheap little parts.
26:29We have more freedom than we need, but unfortunately, you can't make a condenser out of freedom.
26:39Two years ago, the workers complained they were puppets of faraway bureaucrats.
26:44Now that Yeltsin is breaking the stranglehold from the center and giving them more freedom,
26:48I want to hear their reaction.
26:53We used to work for the government, for the party bureaucracy, for our Asian friends.
26:59Then they said, it's finally time to work for ourselves.
27:02That's the way things are going.
27:03But we don't know who we're working for now, for some boss somewhere.
27:08No, actually, we're breaking down the old system.
27:10We used to get state orders and so on, but now we have to find suppliers ourselves.
27:15Plus, the structure of the factory is changing.
27:17We're opening a new shop on free market terms.
27:23I want my children to have enough to eat.
27:25I want butter in the stores.
27:27I want my children to drink as much milk as they want and eat sour cream.
27:31I want full stores.
27:33I want to return to the time of Khrushchev and Brezhnev,
27:36when I could go to the store and buy everything I wanted.
27:40We're heading towards a barter economy.
27:43We'll have to get our own bread, meat, sugar, packaging.
27:47We're heading into the Middle Ages.
27:49We've completely destroyed our economy based on cooperation.
27:54And now we're trying to go back,
27:55not even to our serf society, but to our primitive feudal society.
27:59One woman who is learning to survive in these hard times is Valentina Gromolino,
28:09who runs the Uromash cafeterias.
28:12She and her staff of 1,200 have to scramble to feed the 44,000 workers of Uromash.
28:18We used to have a huge amount of fruit.
28:22Apples, grapes, pears.
28:24We got all that fruit from different republics.
28:28From Georgia, 500 tons of apples.
28:31200 tons of grapes from Moldova.
28:36We got an enormous amount of plums from Uzbekistan.
28:42Sugar from Cuba.
28:43And we'd put it all in these five refrigerated warehouses.
28:47We didn't have any worries.
28:48And now, you see, we don't have anything.
28:51Just juice.
28:53And that will only last two days.
29:00Kotelnikov and I have already drawn up a list of what I need.
29:0415 mils, 40,000 washing machines, and 20,000 machine tools.
29:10You need all that?
29:16I needed to trade for food.
29:20You're a big trader.
29:22A big trader.
29:23I'll show you what I have in storage.
29:31You see how much pork we have?
29:34We traded washing machines for it.
29:36Washing machines.
29:42That's the kind of deals we're doing now.
29:47Isn't it better to do it yourself than depend on the state?
29:55Theoretically, yes.
29:56But we're used to the old system when the state gave us everything.
29:59So it's hard to say.
30:00Kotelnikov, an old guard manager to the Corps, will retire soon, after 40 years on the job.
30:18I started here when there were 360 barracks, when the streets weren't paved, when people lived in huts.
30:27Since then, there have been enormous changes.
30:28The factory has grown, the equipment has changed, the region's population has changed.
30:35And I'm so terribly sorry.
30:37I can't stand watching it all fall apart.
30:42Uralmash is looking for a new director and new blood.
30:46One candidate is Alexander Sagalovich, a 32-year-old former Uralmash shop boss, who quit to become co-owner of a private insurance company.
30:58Uralmash is dying, slowly, but it's dying.
31:01Yes, given the intensive policies of the Russian government, it won't last more than a year or two.
31:10This huge factory?
31:12Of course.
31:13You have to pay people, but there's nothing to pay them with.
31:17Sagalovich has big ideas.
31:19He thinks he can fix Uralmash.
31:21He not only wants to run the factory, he'd like to buy it.
31:25If I put my capital in, you have to understand, I'm not going to throw my money to the wind.
31:34I have reservations.
31:38First, the factory needs major investment.
31:40You have to pull in capital by selling stocks, bonds, and other securities.
31:50If you refinanced like this, you could retool the factory.
31:57Given the talent here, you could put out world-class machines.
32:01The Soviet Union is a big Klondike, if you just use your head a bit.
32:07And what about Uralmash, I ask him?
32:09Is it also a Klondike?
32:11Yes, he says, but the gold is buried deep.
32:15You have to work very hard to dig it out.
32:27As I left Yekaterinburg, what kept ringing in my ears was Kotelnikov's anger at the breakup of the Soviet Union.
32:36Everywhere I went, I heard the same refrain.
32:39People were talking about it on the trains.
32:45One woman questioned me.
32:47How would you Americans feel about the secession of some of your states?
32:55Two years ago, I had seen the nationalist passions let loose by Gorbachev.
32:59In Uzbekistan, police dispersing demonstrators.
33:04In the Caucasus, I saw the faces of civil war.
33:09Azerbaijani parents grieving the killing of their son.
33:13An Armenian woman lamenting the violent death of her husband.
33:18Ethnic hatreds spilling into the streets.
33:23I watched Lithuanians breaking from Moscow.
33:29And then proudly declaring their independence.
33:37Now, the union is shattered.
33:46What troubles the Russians most is that Ukrainians, their closest historic allies, the ones they called Little Brothers, are thumbing their noses at Moscow.
33:56I found Yevgeny, a Ukrainian marathon runner, arguing with Gennady, a Russian athlete, about who should control the Black Sea Fleet.
34:09I think Ukraine has a right to the Black Sea Fleet.
34:18The sailors lived in Ukraine, and Ukrainians fed all the servicemen.
34:24In another compartment, Valentina, a Ukrainian construction engineer, was talking with Viktor, a sales representative from Moscow.
34:31It was like a communal apartment. Usually, families don't get along out of poverty.
34:43But when they split up and live really well, they're nostalgic.
34:49Every nation needs independence for its development, for its children, for its future, for its culture.
34:59Vladimir, a young Russian, shares with me his worries about doing business in Ukraine.
35:04Because Ukrainian banks don't want his Russian rubles.
35:08In these chaotic times, I wondered who among my friends could do more than merely survive.
35:18I thought of Mark Masarsky.
35:23In 1989, Masarsky was a budding capitalist.
35:32He took me to a former prison about 150 miles east of St. Petersburg, which he had converted into a brick factory.
35:40In those days, Masarsky was an idealist.
35:43He attracted workers from all over by offering them high wages and a share in the business.
35:48He called his enterprise a cooperative.
35:52And he quoted Lenin to his workers, saying that socialism was a society of civilized cooperators.
35:58Masarsky meant that bosses should share the wealth.
36:10Since then, Masarsky has come a long way.
36:13He's built a commercial empire from that brick factory.
36:16Now, as head of a nationwide businessman's lobby, he shows me his new offices in the old headquarters of the Communist Party.
36:23It used to be the office of the party finance director, who committed suicide after the failed August coup.
36:30Here's the standard party lamp, the standard party curtains, so no one can see in the office.
36:38And the standard party telephones with direct lines to government offices.
36:43You're a rich man.
36:47Yes.
36:48What's my personal wealth?
36:50More than 100 million rubles.
36:52And that's over the last how many years?
36:55In the last four years.
36:57The majority of my wealth is in securities, bonds, real estate, shares in my company Voltec.
37:08Then there's the bank that I'm director of.
37:10We have five directors.
37:12The bank is very big.
37:13A turnover of 12 billion rubles in 1991.
37:18Then there's a joint venture, Soviet-Italian Yugoslav.
37:23I have several small businesses, and I'm co-owner of a newspaper called New Bridge.
37:29But you spoke before about civilized cooperators.
37:33I've changed my view.
37:37Collective ownership is nonsense.
37:40No matter what I did, no matter how much I drummed it into them that this is all yours, it's not theirs.
37:46Only their paycheck is really theirs.
37:48We have to discover what was discovered long ago in the civilized world.
37:52There's no higher law than private ownership of property.
37:56Private property is the same kind of brilliant human discovery as the wheel and fire.
38:01It's part of civilization.
38:03Today, Masorsky is full of new business ideas.
38:1118 months ago, he set up a commodity exchange like this one.
38:18Already more than 300 such exchanges are operating in Russia.
38:25An important first step toward a capitalist-style wholesale market.
38:30Masorsky has plans to use this building to expand his commodity exchange.
38:43We have 45,000 square meters, the first and second floors.
38:47On the right is the old trading floor.
38:51It's small, very small.
38:53We'll take a look at it.
38:54Traders' offices will be here, and here as well, and here, and the trading floor here.
39:00What do I mean by the trading floor?
39:03We'll have brokers and traders, the trading pit.
39:06If the traders have so much to trade, I ask Masorsky, why are the stores so empty?
39:15Masorsky tells me that corrupt officials in state wholesale monopolies, the trading mafia, Russians call them,
39:22have goods hoarded in warehouses and railroad cars.
39:27The mafia, he says, make enormous profits selling these goods illegally.
39:33But here, we don't barter, we use money.
39:38The commodities exchange is giving the ruble back its initial value.
39:43Another hat Masorsky wears is member of the Moscow mayor's business advisory council.
39:50These are the best and brightest of Moscow's new capitalist world.
39:55Such a group was unthinkable in the communist era.
39:59But for businessmen, their agenda is familiar.
40:03They're angry about a Yeltsin government decree imposing double taxation.
40:08A tax on production and another tax on profits.
40:12My prediction is harsh.
40:17In the first quarter, there won't be any production at all.
40:20Nothing is in place.
40:21The law on taxation will never work.
40:23There won't be any tax revenues.
40:25You can only skin something once.
40:28Masorsky's biggest venture is a gold mining scheme.
40:35He wants to team up with his old friend, gold prospector Vadim Tumanov, and start digging in Siberia this spring.
40:46The government supports the idea, but is wary of giving up its gold mining monopoly.
40:53No official dares give the final okay.
40:56Lots of talk, no action.
40:59No action.
41:14The moment of truth for Masorsky's gold scheme comes in the office of Yeltsin's economics czar, Deputy Prime Minister Yegor Gajdar.
41:26Gajdar likes Masorsky's gold scheme, and he bargains with Masorsky over the price the government will pay for the gold.
41:36508.
41:37508.
41:38508.
41:39508 рублей.
41:40Да.
41:41508 рублей.
41:42Ну хорошо.
41:43508 рублей.
41:44Разумно это?
41:45Вот у нас 2 миллиарда час рублей.
41:46Мы собрали.
41:47Крупные инвесторы.
41:48Мы готовы.
41:49Вот сейчас в боем рвемся.
41:50Мы уже ввели, так сказать, в этот оборот уже ресурсы кое-какие.
41:53Мы тоже не с пустыми руками.
41:54Мы готовы в апреле делать промышл.
41:56Вот 508 я воспринимаю сюда.
41:58508, хорошо.
41:59Согласны.
42:00Ну и 2 доллара нам нужно развиваться.
42:022 доллара, пожалуйста, по рыночному курсу.
42:04Ну давайте попробуем.
42:05Давайте попробуем.
42:06Давайте попробуем.
42:07Кроме этих 500, в счет этих 508, вы берете студии, из них вы читаете 220.
42:14Я даю вам после этого 300 рублей по цене и 2 доллара.
42:19Идет?
42:20Хорошо.
42:21Это вот наше дело.
42:22Давай.
42:23Вот давайте...
42:24For Gaidar, it's a good deal, if it sticks.
42:27But I'm amazed to see a minister operating like a floor trader.
42:31His prescriptions for the Russian economy are no less bold.
42:35He's the architect of Yeltsin's shock therapy of free prices.
42:40My first and most important goal is to win the shortages and create a market system.
42:46We need to have market prices, and to get rid of the system in which the seller dictates
42:53who he sells to.
42:55Give everyone who has money a chance to buy these goods.
42:58Start the market mechanism.
42:59I tell Gaidar that everywhere, people complain that all he's done is raise prices.
43:06I ask why he's not moved faster on privatizing state industries.
43:10I can raise prices overnight, Gaidar replies, but I cannot privatize overnight.
43:18That takes a long time, and haste does not always bring good results.
43:24What's the problem, I ask?
43:29Gaidar replies that state monopolies would gladly privatize to become private monopolies.
43:37So first, he says, we must break up the monopolies, and then we can privatize.
43:43I also tell Gaidar, businessmen are complaining about high taxes.
43:50I head the association of business leaders, and they say, we'll go under.
43:55They'd go under only for one reason, because they're not competitive.
44:00Gaidar is a brilliant student of Western economics, but I think he may be betting too much on theory.
44:06I wonder, what about the social consequences?
44:16I head for Brteeva to see some old friends.
44:25Brteeva epitomizes urban life in Russia.
44:28It's a Moscow working class district of dormitory apartments crammed with 60,000 people.
44:38Here, shortages are not theoretical.
44:41My friend Sergei Droganov, head of the local government, runs out of gas.
44:47I see little change in Brteeva since my last visit two years ago.
44:51But Droganov has one surprise for me.
44:54A cable TV channel.
44:56There, on his weekly report to the neighborhood, he interviews me.
45:01Two years ago, we were familiar with him, with his activities.
45:06He was in Brteeva.
45:08He was in Brteeva.
45:10He followed us.
45:12He made a historical film, which was called...
45:17How was it called?
45:19SSSR, during Gorbacheva.
45:22SSSR during Gorbacheva.
45:23When I met Sergei in 1989, people in Brteeva were up in arms about industrial pollution.
45:34Sergei was trying to rouse people out of decades of apathy.
45:38This group of activists were demanding not only clean air, but local self-government.
45:48Nina Shedrina, a school teacher, was another Brteeva leader.
45:55Today, like Sergei Droganov, she has become an official of the new Brteeva District Council.
46:01I asked Nina how things had changed since 1989.
46:05Two years ago, we were so full of strength, energy and plans.
46:11We thought that we had only to take power, and it would all work out.
46:16Now we have the power in our own hands. We're deputies.
46:20We don't have enough specialists. We don't have enough money.
46:26We don't have a movie theater. We don't have a children's center.
46:31We don't even have a militia precinct. We don't even have a decent dry cleaners.
46:37We don't have enough schools. We have to build schools.
46:41We're tied to the city because we get funds from them, but the government has thrown up its hands.
46:46They say they don't have it. It's exhausting. There are no goods in the stores, so we have to attract businessmen with goods to sell.
46:56It's all on our shoulders.
47:10Today, Droganov and Shedrina focus mainly on helping residents cope with economic hardships.
47:16But everything they try raises new problems.
47:19The state store kept running out of milk, so they helped organize a private grocery.
47:25It stocks a few more products, but its prices are controversial.
47:39The shop manager says his hands are tied.
47:43He depends on the state wholesale monopolies and their holding back supplies.
47:48Housing is another frustration. The mayor of Moscow wants to give away state-owned apartments to their occupants.
47:59But this does not stir enthusiasm in Brataeva. And Nina wants to know why.
48:05You have an apartment that you could get free of charge. What's holding you back?
48:11The woman worries that as an owner she'll wind up paying more for repairs and utilities than the cheap, subsidized rent that she now pays the state.
48:20Nina sees a more basic flaw in the mayor's scheme.
48:25It's unfair, she says, because the old communist bosses, who always allocated themselves the biggest apartments, will now own them.
48:34While ordinary people will get small, cramped apartments.
48:38Wherever they turn, Sergey and Nina run into the problem of fairness and of people with something to protect.
48:49Any change hurts somebody.
48:51There's a state organization in Moscow, a monopoly. It's a chain called Silhouette that makes clothing on order.
49:04It took up a colossal amount of space, 2,000 square meters. And you see how they used it.
49:11There's nothing to buy.
49:13These seamstresses are angry because Draganov has told them that their Silhouette tailor shop must give up half of its space to make way for a new shoe store.
49:25They said, tell me, they stop if they were chicken, they stop with the food, they stop.
49:30If they don't want to sue, they don't want to sue.
49:37This is fair or not?
49:38A personal ambition.
49:40They don't want to work
49:42They want to work.
49:43They don't want to work.
49:44Please, don't want to work.
49:45We want to produce products.
49:47In the back room the argument is heating up between the Briteeva council and the vice director of the clothing chain.
49:52clothing chain.
50:22That man represents the narrow interests of his state
50:41organization. He doesn't want to give up all the space, even though you see how they're
50:46wasting. Eventually, under city order, the shoe store gets half the space, but that brings
50:55no peace. For Sergey and Nina, merely taking over the local government has not been enough
51:04to solve Brateyeva's problems.
51:06The next day, I go to see Druganov at his downtown office in the White House. This is where Boris
51:32Yeltsin scrambled onto a tank and made history a few months ago. Druganov, now an elected
51:39member of the Russian National Parliament, shows me around. A political housecleaning is underway.
51:53As we talk, Druganov tells me that Russia's newborn democracy is in danger. People still live
52:14by the dogmas that they learned in kindergarten, in school, in college, and so on. These dogmas
52:20are still alive. On the one hand, the process can't be accelerated, but at the same time, you have to
52:29prepare the ground so that people can think and act as freely as possible. What about the leaders?
52:36Right now, the executive branch is consolidating from top to bottom. We might face even worse
52:47examples of totalitarianism. You wonder, in whose hands would that totalitarian power fall? I don't
52:58mean Yeltsin. His approach has been sensible. But what if it's not Yeltsin, but someone else? He'd have that
53:05strong executive power in his hands. And then what kind of government would we have?
53:12Like others, Druganov is also uneasy about privatizing the economy without a clear plan. He wants the efficiency
53:19of the market, but he fears the injustices of cowboy capitalism.
53:29Privatization, he asserts, must be not just for the few, but for everyone's benefit.
53:40It is natural for Russians this winter to be pessimistic. The realities are stark. The agonies are palpable.
53:48And there are dangers of mass unrest. But the picture is not all bleak. Early signs of a market economy.
53:58A new breed of entrepreneurs, like Masarsky and Sagalovich. The first few private farmers, like Yodzikov.
54:07But most Russians are not yet animated by a new dream, a new vision of their future. And the weight of the past lies heavy.
54:18Old ways, old habits, and older people feeling abandoned, anxious about the future.
54:25Old guard bosses of the state economy, like Stara Dubsov and Ketelnikov, resist and protest at every change.
54:37To watch Russians celebrating the arrival of the new year on Red Square is to see a mixture of hope and fear.
54:46Many of us assume that for Russians to change their country means merely adopting Western ideas.
54:55What we need to understand is the difference between building America and modernizing Russia.
55:00When immigrants came to our country, they had to give up their past and had to embrace the new world.
55:08But Russians can cling to their past, and they do.
55:13And that makes it ever so much harder to build their new world.
55:17SCREAMING
56:50For its content.
56:56For video cassette information about this program, please call this toll-free number, 1-800-328-PBS1.
57:05This is PBS.
57:10Next time on Frontline...
57:14Ladies and gentlemen, I've made mistakes in my life.
57:18I was certainly intolerant in speech.
57:21I was too stride in my life.
57:22Does David Duke still hold the racist beliefs of his youth, or has he changed?
57:27His immediate response to that was, I haven't changed.
57:30He said, the same things that drove me as a 17-year-old or a 25-year-old are the same things that drive me today.
57:36Who is David Duke?
57:38Next time on Frontline.
57:39For a printed transcript of this or any Frontline program, please write to this address.
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