From Gorby-mania to Putin’s putsch

When I was a graduate student at the University of Minnesota in 1990 USSR President Mikhail Gorbachev visited the Twin Cities of Minneapolis and St Paul. Gorbachev and his very popular wife Raisa got a huge turnout – even more than the incumbent President Bush senior when he visited the same year. The visit was very popular among Minnesotans, with ‘Gorby-mania’ the talk of the local media. Huge crowds followed the Gorbachevs wherever they went, lining up from early morning to catch a glimpse of the Soviet Union President and his charismatic wife.

So why the Gorbachevs did chose Minnesota?  It was partly because the Soviet leader wanted to look at agriculture in the Mid-West of the USA. This was reminiscent of Khrushchev’s visit to Iowa in 1959 just over three decades earlier. He was also keen to look at technology (partly to import some US technology to Chernobyl after the failure of its nuclear facility).

Minnesota being an advanced agriculture state (we would call it an ‘agtech hub’ today) and the Twin Cities of Minneapolis and St Paul being the headquarters of leading US technology companies at the time, Control Data, Honeywell and 3M sealed the deal for the visit. Mikhail Gorbachev met the Governor of Minnesota, signed an investment deal, visited some agricultural shows, and had a tour of Control Data. And Raisa visited a local Minnesota farming family to discuss American life over milk and cookies. It was hard to believe this was the first couple of America’s cold war foe the Soviet Union, with the Gorbachevs regularly leaving their motorcade to press the flesh with the public like any democratic politician would. Was the cold war really over? It seemed on that unseasonably chilly June day in Minnesota there was some hope.

But by 1991, it was all over. The old communist hardliners arrested Gorbachev and by the time the attempted coup was overturned, Gorbachev was humiliated by Boris Yeltsin as the new President of Russia as the old USSR collapsed. I regularly visited Russia in the days of Yeltsin’s cowboy capitalism. The Oligarchs reigned supreme and in fact I met a few of them at the opening of an Australian Aboriginal Art exhibition in Moscow, where they tried to buy paintings by the dot with US cash.  Australian made make up accessories were handed out by Russian models (emblazoned in dots to look like the paintings) to the Oligarch’s girlfriends. It was the art of one of the world’s oldest civilisations coupled with the conspicuous consumption of Moscow’s new wealthy elite, a sort of Pushkin meets Pitjantjatjara.

The instability of the Yeltsin era (US President Bill Clinton had actually insisted Russia be admitted to APEC to shore up Yeltsin) was followed by the installation of Vladimir Putin as President, Prime Minister and President again after manipulation of the constitution and all resistance to the democratic reform promised by Gorbachev in the era of ‘glasnost’ (openness) and ‘perestroika’ (economic restructuring).

Putin let Yeltsin’s Oligarchs expand their empires until they called for democratic reform when he stripped their assets and gaoled them. Gorbachev, after originally supporting Putin as a strong stable leader after Yeltsin, fell out with him. Gorbachev regretting not shoring up property rights and the legal system before he sold state assets to the oligarchs and not enshrining democratic reforms in the constitution more effectively. As a result we got neither glasnost nor perestroika, with Putin effectively a modern Tsar with KGB tendencies and a Russian economy reliant on oil and gas.

Today, Russia’s aggression towards Ukraine is partly about access to the port facilities that send Ukrainian wheat, maize and barley to the world. Alas, Australia is in some ways benefiting from the conflict by selling our wheat to the world in place of Ukraine’s.  Under Putin, there’s none of the economic reform envisaged by Gorbachev’s visit to Minnesota. Instead it’s expansion by stealth and military aggression. That’s the tragedy of Gorbachev’s failure to win as much support in Moscow as he did in Minnesota.

Tim Harcourt is Industry Professor and Chief Economist at IPPG at University of Technology Sydney (UTS) and host of The Airport Economist www.theairporteconomist.com