The Russian financial crisis

By Art Perlo

This article was reprinted from the August 22, 1998 issue of the People's Weekly World. For subscription information see below. All rights reserved - may be used with PWW credits.

The ongoing financial crisis in Russia is a signpost of heightened class struggle there - and in the United States.

In the past two weeks, major Russian banks have been on the brink of collapse. Interest on bonds (payable in rubles) has risen from 35 percent to 100 percent, 200 percent, even 300. Russia pays out more in interest on bonds than it collects in revenues - no wonder workers aren't being paid!

Foreign banks have loaned $72 billion to Russia, with German banks having the largest share ($30 billion). As long as they can keep payments coming, they make loan-shark profits. The recent IMF loan of $22 billion to Russia, and the IMF orders to cut corporate taxes and squeeze the people harder, are designed to preserve these profits.

But you can only squeeze so hard! Since the restoration of capitalism in the former USSR, industrial production has fallen by half and Russia now imports half its food. The Russian gangster-capitalists and the imperialist corporations have grabbed a big chunk of what's left. Chevron, Mobil, Amoco and Exxon have major interests in the Soviet oil fields. This doesn't leave much left over to pay debts, and even less to meet the needs of the Russian people.

Russia has been forced to devalue the ruble by up to 50 percent. This means that Russia will have to sell twice as much oil in a glutted world market to buy the same amount of wheat. Exxon will be smiling, while the Russian workers and retirees will try to survive on nothing at all.

But the Russian people are showing greater resistance to being squeezed. The ongoing strikes in Russia are just the tip of an iceberg of resistance by a working class being driven to the wall by unemployment, non-payment of wages and destruction of social services.

Yeltsin was able to defeat the Communists in the last presidential election with the massive political and financial support of the CIA, and U.S. and Russian corporate interests. Now, according to "The Nation," polls show that the Communists would double their strength in new elections.

The Russian financial collapse is part of a spreading world economic crisis, which began last year in Asia. The New York Times quotes a Wall Street analyst saying, "If what is going on in Asia and Russia spreads to Latin America, I can't see how the United States can be immune from that." There are signs that it is spreading and it is possible that we are seeing the beginning of the most serious worldwide economic crisis since the Great Depression.

As economic crisis spreads around the world, so does class struggle. Confronted with losses and declining investment opportunities in Asia, Russia and Latin America, U.S. corporations will squeeze American workers even harder in an effort to restore and increase profits. Aalthough the U.S. is far from the revolutionary crisis Russia is teetering on, there are similarities in the growing class struggle.

The 45-million member Federation of Independent Trade Unions of Russia, after years of inactivity, has finally announced support for the coal miners' strike and their blocking of railway lines. They are backing the movement to impeach Yeltsin, and fielding a Labor Party for the 1999 Duma (parliament) elections and the presidential elections in 2000.

In the U.S., the labor movement, under new leadership, is also increasing its resistance to the anti-worker war being waged by the corporate interests. Organizing the unorganized is increasing. Militant strikes are being fought and won (UPS, Bell Atlantic). The labor movement is rebuilding its traditional ties with civil rights and other progressive community forces. And following the successful Labor '96 campaign, Labor '98 is building working class political muscle to defeat the right-wing Republicans this year.

Indeed, Russian and U.S. workers have a lot in common, because we face a common enemy - the same monopoly corporations.

Even the New York Times admits that the situation in Moscow today seems to confirm Lenin's predictions. Marx and Lenin described and predicted the global crises, which are inevitable with capitalism. The question is who pays for the crisis?

Working class resistance can reduce the burden on the people. But the only way to get rid of capitalist crises - and their devastating effects - is to get rid of capitalism and replace it with socialism.