Gorbachev’s rule that prepared the coup of 1991 and the destruction of the USSR
Gorbachev — instead of obituary
My translation of the article on Strategic Culture Foundation on 31.08.2022 | by Alexander DUDCHAK
…Foreigners started buying up Russia for peanuts
Gorbachev was never the naive advocate of “change” he tried to appear to be.
Gorbachev systematically, starting in 1985, through the adoption and implementation of various decisions of the party and the government, created structures of the “shadow” party economy both in the USSR and abroad. In order to fulfill his tasks, Gorbachev personally determined the list of “trusted” persons from among the members of the CPSU Central Committee, the Affairs Control of the CPSU Central Committee, the leadership of the KGB, the Ministry of Finance and the Central Bank that he deployed to do this work.
Pretending to address the issue of long-overdue reforms of the USSR economy under Gorbachev’s leadership, a new law on state enterprise was adopted in January 1988. According to it, the state was exempted from liability for the obligations of the enterprise. The enterprise was also not liable for the obligations of the state. This law brought chaos and disorganization to the economic activities of enterprises. At the same time, the centralized distribution of funds was preserved under the conditions of the planned economy. Ministries still had to supply enterprises with everything they needed, and enterprises, according to the new law, could dispose of this property at their discretion.
The country’s economy turned into a one-way street. Enterprises were given the opportunity to gradually move away from state orders and develop according to their own plan, independently deciding on staffing issues, as well as on ways to sell goods and pricing. But the absence of market infrastructure and intermediary organizations made this way very difficult. Despite a clause in the bankruptcy law, state subsidies prevented the organizations from being finally liquidated, thus reinforcing a vicious circle: misallocation of funds, laundering of the state budget, and mismanagement of the country.
In May 1988, under Gorbachev’s pressure, the USSR Supreme Soviet adopted the Law “On Cooperation”. The general phrases of numerous articles of this law hid their true essence: enterprises were allowed to establish cooperatives with the right to use centralized state resources. But, unlike shops and even unlike the enterprises themselves, these cooperatives could, according to the law, independently carry out export operations, establish commercial banks, and abroad — their own companies. At the same time, the proceeds in foreign currency were not subject to seizure. In the period from 1988 to early 1989, the USSR Council of Ministers adopted decisions that abolished the state monopoly on foreign economic activity, prohibited customs to detain the cargoes of cooperatives, and allowed them to keep the proceeds abroad.
Using his administrative resources, Gorbachev first freed enterprises from their obligations to the country, then transferred their assets into the hands of cooperators and opened the borders of the USSR wide open.
In a matter of weeks, most state-owned enterprises were registered as coops, whose owners were relatives of directors, secretaries of regional committees, and members of the CPSU Central Committee. And from the state funds the factories and plants still received resources for production, but now the directors themselves had the right to dispose of these products. They began to channel these resources into the ownership of “family” cooperatives, and they sent them abroad. Cement and metal, oil products and gas, cotton, lumber and mineral fertilizers, rubber and leather — everything that the state sent to enterprises for processing and saturating the domestic market, was sent by railroad trains abroad through the “green zones” on our borders. Cooperative leaders and officials began to accumulate their offshore capital in personal accounts abroad.
According to Gorbachev’s plan, at the hour of X, these funds were to be brought back into the country legally, through their banks, to buy up their own enterprises.
In 1988–1989, the cooperatives formed “by Party decision” took out of the USSR half of the consumer goods and assets produced in the country.
The domestic market collapsed, and the country became short of industrial and food products. On the orders of Gorbachev and Ryzhkov, the gold reserve of the Soviet Union was thrown into the market to buy food abroad. Gold flowed abroad for the purchase of “foreign” food. Often, domestic food purchased on the domestic market was imported under the guise of foreign food. In the ports of Leningrad, Riga or Tallinn ships were loaded with cheap fodder grain, rounded Europe by sea and came to Odessa with “imported” food wheat for the USSR at a price of $120 per ton. Only in 1989 2750 kg of gold was taken out of Magadan to buy corn seeds from the USA and Canada. The route of transportation of gold passed through Tatarstan, and then it was sent to Israel together with diamonds worth $28 million.
On February 13, 1990, Gorbachev issued a directive “On the need to consider some legal aspects of the party’s life activity in connection with the results of the February (1990) plenum of the CPSU Central Committee”. This directive speaks of the necessity of transition to a multi-party system in the USSR and the possibility of seizing from the party its property, primarily buildings provided to party committees, other organizations and institutions of the CPSU: publishing houses, printing houses, vacation facilities, sanatoriums and other social facilities, vehicles, etc.
A top secret order of Gorbachev and Ryzhkov established a special order of the dollar exchange rate for the CPSU Central Committee staff. The leading top officials were allowed to exchange 1 US dollar at the rate of 62 kopecks, and all other citizens of the country the exchange rate was set at the rate of 6 rubles and 26 kopecks for 1 dollar. Members of the CPSU Central Committee and apparatchiks were allowed to get loans in banks, buy up currency and export it abroad, opening personal accounts in foreign banks without restriction.
All this was happening when Soviet workers, scientists, military personnel, and officials were no longer paid their salaries. Mass unemployment began, strikes and rallies broke out, food and manufactured goods disappeared, economic and financial ties between enterprises were disrupted, republican Communist parties moved toward “national sovereignty,” and popular fronts were created.
The leaders of the Union republics, looking at what was happening in Moscow, began to carry out an anti-Russian campaign. National confrontations arose in the Caucasus, the Baltics, and Central Asia. The first shots rang out in Transnistria. Russian refugees poured out of the republics into Russia, where they were of no use to anyone. All mass media broadcasted appeals to “Russian people” to help their compatriots who had fallen into unprecedented misfortune. Account numbers were given, to which it was asked to transfer money “whoever could”. Nobody had any money, workers’ salaries were not paid for several months… Mass rallies of workers in various branches of the national economy, connected with non-payment of wages and miserable existence, became commonplace. Within a short time 166 mines went on strike — about 180 thousand people.
On March 13, 1990, not without Gorbachev’s participation, Article 6 of the country’s Constitution was abolished, which secured the CPSU’s political monopoly in the USSR. The CPSU lost its political hegemony, but its top brass under Gorbachev’s leadership, possessing capital, had already become a separate caste. The country began a complete “rampant democracy” in the form of the financial introduction of the American dollar into the USSR economy, which led to the complete collapse of the financial system of the USSR.
Through the owner of the CBC news channel, Maxwell, billions of dollars flowed from the USSR to the West. He sold Soviet rubles for currency in the West and there these funds were deposited in private accounts.
To sell the Soviet ruble to the West, Gorbachev, in collusion with Maxwell, with the help of the USSR Finance Minister Pavlov and the manager of the USSR State Bank Gerashchenko, attracted Swiss financier Schmidt from the firm “Bureaugemeinschaft”, engaged in intermediation. The Swiss flew to Moscow, held talks with Pavlov and Gerashchenko.
They agreed on the withdrawal from the circulation of the USSR and the sale of 280 billion rubles. Schmidt was an experienced financier and had a clear understanding of the state of money circulation in the Soviet Union (in the USSR at that time there were only 139 billion rubles in cash circulation). Upon receiving Pavlov’s proposal to sell 280 billion rubles, Schmidt asked him, “Are you going to remove this money from circulation?” “Partially,” replied the USSR Finance Minister. And immediately clarified: “But you don’t think we are idiots. We are rich. Don’t worry about us! We will print more money.”
The deal was prepared by Gerashchenko and Pavlov in advance, by secret order of Gorbachev. Pavlov, Gerashchenko and Schmidt came to an agreement regarding the execution of the deal to sell 280 billion rubles to the West and agreed to act in four stages, namely:
the first stage — in December 1990–100 billion rubles are taken out of the USSR and sold for $5.5 billion;
the second stage — in January 1991–25 billion rubles;
the third stage — in May 1991–15 billion rubles; the money of the second and third stages is sold for $2 billion;
the fourth stage — in July 1991–140 billion rubles sold for $4.5 billion.
In total, $12 billion was received for 280 billion rubles. The deal was finalized on the eve of the August 1991 coup.
The sale of Soviet money was personally managed by former USSR finance ministers V. Pavlov and V. Orlov. Thus, V. Pavlov arrived in Switzerland incognito (with a forged passport) at the end of 1990. He had no contacts with either the Soviet embassy in Bern or the Swiss authorities. In Zurich there were secret meetings of Pavlov with Schmidt and heads of Swiss, German, French and British banks, and at the end of January 1991, the new Minister of Finance V. Orlov also traveled to Switzerland on false documents, where he met and talked with representatives of financial circles in the U.S. and Europe. In addition to the question of mechanisms for transferring money to the West, Orlov said that Gorbachev and his government wanted to sell a significant amount of gold, diamonds and platinum, but were afraid that because of information leaks the prices for them on the world market could fall.
At the conclusion of the deal, according to witnesses, Mr. Pavlov told Mr. Schmidt: “Those who sent you know the account numbers to which this money should be transferred. At the last stage, Mr. Orlov will personally supervise the transaction.” According to the agreement, the specified sums in ruble equivalent were taken out of the USSR to Switzerland. Schmidt, as he himself said, bought the Soviet Union for only $12 billion.
The theft of the Soviet money supply had brought the country to total collapse.
The damage to the state was incalculable: 360 billion rubles of labor savings of the people of the USSR lying in savings banks were devalued, the country’s financial system was completely destroyed.
This deal eventually led to the complete collapse of the USSR. Gorbachev’s clan devalued the Soviet ruble to an all-time low in order to buy up the giants of our industry and the largest raw material deposits for next to nothing. Back in 1985–1987 one US dollar in international settlements cost 0.6 rubles, in 1990 — already 3.6 rubles, and in 1991 the value of one dollar reached 18 rubles. After the collapse of the USSR, the seizure of power in the country by Yeltsin’s group and the West’s dumping of Soviet rubles bought from Gorbachev’s group, the ratio of currencies in 1992 fell to the level of one dollar per 1000 rubles. If in 1985–1987 the value of our oil refinery was 500 million rubles, that is, $790 million at the exchange rate of the time, in 1992 — only $500 thousand. Foreigners began to buy up Russia for peanuts and glass beads….
