Post Cold War 2

1. After the Soviet Union was dissolved in 1992, Boris Yeltsin and his supporters wanted to free prices on 90% of all Russian goods, launch a rapid privatization of industry, and encourage citizens to invest in the private companies by giving them 10,000 rubles. There wanted to revive production and bring prosperity after a brief period of hard-ship, but the reforms were mostly the opposite. Prices increased 250% on the first day and increased to twenty-six times in 1992. Russian production fell by 20% and was able to recover by 1997, with the inflation gradually slow-ing. Soviet industry had been monopolized and focused on military goods, with production of many items being concentrated in one or two gigantic factories or in interconnected combines that supplied the entire economies. Privatization caused these state monopolies to become private monopolies, which cut production and raised pric-es to maximize their financial returns. Managers and bureaucrats forced Yeltsin’s government to hand out enormous subsidies and credits to reinforce the positions of big firms and to avoid bankruptcies and the discipline of a free market. The managerial elite combined with criminal elements to intimidate would-be rivals and prevent new businesses. The runaway inflation and poorly executed privatization allowed for a new capitalist elite to acquire great wealth and power, while large numbers of people fell into poverty while the majority struggled. Russia’s oil and natural resources industries allowed people to become very rich, so that by 1996, Moscow, which represented 5% of Russia’s population, accounted for 35% of the country’s national income and controlled 80% of its capital resources. The vast majority saw their savings become practically worthless, as pensions lost much of their value and people sold their personal goods to survive. The average life expectancy in 1991 was sixty-nine years, but in 1996, it was fifty-eight.

2. The economic decline and rising popular dissatisfaction encouraged a majority of communists, nationalists, and populists in the Russian parliament to oppose Yeltsin and his coalition of democratic reformers and big-business interests. Yeltsin wouldn’t accept any compromises and insisted on a strong presidential system. He won in April 1993 with 58% of the vote and brought in tanks to crush a parliamentary mutiny in October 1993. He then consol-idated his power and used his big-business cronies in the media to win again in 1996. The widespread disillusion-ment set the stage for Vladimir Putin to be elected in 2000 and reelected in March 2004. He maintained free markets in the economic sphere but reestablished semi-authoritarian political rule. In 2004, with high oil prices, the Russian economy had been booming for five years. The Russian middle class expanded rapidly, and the elected parliament supported Putin overwhelmingly. Putin also soothed the country’s injured pride and symbolized its national resurgence. The government also repressed the Chechnya freedom movement.

3. Developments and problems in eastern Europe were similar to those in Russia. The postcommunist states worked to replace state planning and socialism with market mechanisms and private property. Western-style electoral politics took hold, which were characterized by presidents, parliaments, and weak political parties. Ordinary citi-zens and the elderly lost the most, while the young and the ex-Communists were the big winners. Inequalities be-tween richer and poorer regions increased. Capital cities concentrated wealth, power, and opportunity, while provincial centers stagnated and old industrial areas declined. Crime and gangsterism increased in the streets and executive suites. As communism died, nationalism was reborn, as nationalities with long histories and rich cul-tures demanded national self-determination. Poland, the Czech Republic, and Hungary were more successful than Russia in economic reconstruction because they were flexible, lacked dogmatism in government policy, and en-thusiastically embraced capitalism. In the first five years, Poland created twice as many new businesses as Russia with a population one-fourth as large. The three successful countries did better than Russia in creating new civic institutions, legal systems, and independent broadcasting networks that reinforced political freedom and national revival. Lech Walesa of Poland and Václav Havel of Czechoslovakia were effective presidents. After Czechoslova-kia’s Velvet Revolution in 1989, Havel and the Czech parliament broke away with Slovakian nationalists in 1993. The three northern countries managed to control national and ethnic tensions that might have destroyed their postcommunist reconstruction. Poles, Hungarians, and Czechs hoped to find security in NATO membership and economic prosperity. After the Clinton administration approved them, they were accepted in 1997. Romania and Bulgaria lagged in the postcommunist transition. Western traditions were much weaker, and both countries were much poorer than neighbors to the north. Their per capita national incomes were one thousand to two thousand less than Hungary and the Czech Republic.

4. After Josip Tito died in 1980, power passed to the sister republics, which encouraged a revival of regional and eth-nic conflicts. The revolutions of 1989 accelerated the breakup of Yugoslavia. Serbian president Slobodan Milosevic wanted to grab land from other republics and unite all Serbs into a greater Serbia. In 1989, Milosevic abolished self-rule in Kosovo, where Albanian-speaking people were the majority. Milosevic strengthened the cause of sepa-ratism, and in June 1991, Slovenia and Croatia declared their independence. Slovenia repulsed a Serbian attack, but Milosevic’s armies took about 30% of Croatia. In 1992, the civil war spread to Bosnia-Herzegovina, which had declared its independence. Serbs refused to live under the more numerous Bosnian Muslims. The Bosnian civil war was ruthless, as there were murder, rape, destruction, and concentration camps. In July 1995, when Bosnian Serbs overran Srebrenica, a Muslim city that was considered a safe area, and killed several thousand civilians, NATO bombed Bosnian Serb military targets intensively, and the Croatian army drove all the Serbs from Croatia. In November 1995, President Bill Clinton compromised the two sides and gave Bosnian Serbs 49% of Bosnia and the Muslim-Croatian peoples the rest. NATO troops patrolled Bosnia to maintain the peace. After Kosovo gained nothing from the Bosnian agreement, Kosovar militants formed the Kosovo Liberation Army and began to fight for independence. In 1998, Serbian forces attacked KLA guerrillas and unarmed villagers, displacing 250,000 people within Kosovo. By January 1999, the Western powers were threatening Milosevic with heavy air raids if he did not withdraw Serbian armies from Kosovo and accept self-government for Kosovo. After Milosevic refused, NATO be-gan bombing Yugoslavia in March 1999. Serbian paramilitary forces then drove 780,000 Kosovars into exile. NATO then doubled its bombing campaign, forcing Milosevic to withdraw. Milosevic was then replaced in July 2001 by a new pro-Western Serbian government.

5. The Single European Act of 1986 established a legal framework for creating a single market, which would add the free movement of labor, capital, and services to the existing free trade in goods. The European Community was renamed to the European Union in 1993. French president François Mitterrand and German chancellor Helmut Kohl pushed for a monetary union of EU members. In December 1991, the member states agreed to the Maas-tricht treaty, which set strict financial criteria for joining the proposed monetary union and set 1999 as the target date for its establishment. The treaty anticipated the development of common policies on defense and foreign af-fairs. Western European elites and opinion makers supported the step, hoping to solve economic problems, im-pose financial discipline, cut costs, and reduce high unemployment. The plan encountered widespread popular opposition and opposition from ordinary people, leftist political parties, and patriotic nationalists. Many people resented the flow of rules handed down by the EU’s bureaucracy in Brussels, which sought to impose common standards on everything and undermined national practices and local traditions. Power was lost from national pol-itics and electoral competition. Many ordinary citizens feared the new Europe was being made at their expense, as governments had to meet strict fiscal standards and impose budget cuts. French voters elected Jacques Chirac in 1993, giving a coalition of conservatives and moderates power over the Socialist party. He had won by promis-ing an attack on unemployment, but he chose deficit-reducing cuts in health benefits and transportation services. France’s unions and railroad workers, with the help of the Socialists, responded with massive protest marches and a national strike that shut down rail traffic throughout France for almost a month. The public supported the war because of sympathy. The government backed down and adopted less controversial measures, but the Socialists soon gained control of the National Assembly. They passed a new law to reduce the legal workweek to thirty-five hours. In 1991, Germany invested greatly in its eastern provinces, but there was still social unrest. In late 1997, unemployment was at 12.8%, with 20% in the east. Eastern German women had to face expensive childcare and other pressures to stay at home and let men take the better jobs. Sweden, Finland, and Austria were accepted into the EU later. On January 1, 2002, the euro was established smoothly. On May 1, 2004, the European Union added Poland, the Czech Republic, Hungary, Slovenia, Slovakia, Estonia, Lithuania, Latvia, Malta, and Cyprus. In June 2004, the leaders of the European Union reached agreement on the new constitution, which organized all the former European treaties. The EU constitution created a president, foreign minister, and a voting system, and created a centralized federal system, with the states being able to veto taxation, social policy, and foreign affairs.