with the palm of your. book about let's have the headlines for. the fact and fiction rushes rallies resurrection marches take the twisting for news coverage america's fox news has wrongly used footage of the riots in greece small teach this one mosque. future security is at stake has russian and nato foreign ministers meet to tackle vital sticking points and discussed corporation afghanistan the european missile defense and the prevention of another libya style military intervention are among the priorities of. the single currency is about to face its toughest test yet

as european leaders gather later for a crucial summit on the eurozone debt crisis they'll consider french and german proposals to impose tight budget controls and this school for the rest of the block . next to the program focuses on the final moments of the soviet era two decades ago. well the true science technology innovation hall believes developments from

around russia we've got the future covered. oh yeah no world come to spotlight me into the show but i'm out there in all of and today my guess is that if you have rush. exactly twenty years ago today that collapse of the soviet super probably pushed the whole world into a new year many experts say crash was inevitable as the country faced festive period comic crisis in the late night but others think the situation was not that bad and down for even mastermind by the phones of the us to stop whereas the truth was the soviet union unmoved victim of an economic downturn and could it be safe in

knowing to know the one we in russia believed that the one behind all that was gorbachev we suspect that money dollars and rubles mattered more than political will so here's the former chairman of the soviet style full back and still one of the most renowned bankers in russia picked up. by the beginning of the. it is the soviet economy had been suffering a long lasting stagnation it was greatly stressed by the arms race and oil prices which caused a sharp fall in moscow's foreign currency earnings. perestroika reform was designed to set things right by commercializing and liberalizing the economy but these reforms didn't help and the hardliners plot against the reformers all the scoop eventually led to the collapse of the soffit union.

mr gresham co welcome to the show. for civil service talk about the collapse of the soviet union you were the head of the state bank when the soviet union disintegrated. was it as much of a surprise as it was for ninety percent of the russian people. when they. came to the state bank in one thousand nine hundred eighty nine prior to that so i worked my entire life. toward bank foreign trade bank were often interacted with western businesses so i realized we were moving towards a dead end. so. since my college years i've been friends with violence in public of who was the head of the pricing committee and later finance minister and later got involved to the ninety ninety one coup. so i big trouble lots of information from my conversations with him. in fact there were

serious reforms in the works in this government they included three key aspects. the first the pricing reform because pricing and been wrong ever since industrialisation. i see. what then there was only government property and collective property. you know there were a few workshops in collective property producing consumer goods like clothes for example and some apartment blocks were collected property too and third we had no taxes the only tax we had was the income tax there was also the tax and childlessness. people were frowned on then as they are now other than that companies simply handed over all the revenues to the governments and the governments then distributed this money among recipients by the way quite often up to four different versions of the budget were prepared because nobody knew which

industry will be given priority next year anyway all that was supposed to be reformed but since political events were forming a different scenario i mean the conflicts between those two people. charged yes because of that everything went haywire. well let's take a look at how the u.s. sorry disintegrated twenty years ago spotlights you in the d. me the has the story. the liberalizations of society me for you gorbachev initiated in the you with this song in the late one nine hundred eighty s. led to grow when ethnic self-awareness in the country's republics and the rise of nationalist movements calling for independence the feeling grew stronger as the world watched communist regimes overthrown one by one all across eastern europe in one thousand nine hundred nine their revolution school i mixed in the fall of the

berlin wall in one thousand ninety which was a powerful premonition of changes awaiting the largest socialist state in march one thousand nine to one i refer and them was held in the u.s.s.r. which showed a majority of soviet citizens who wanted to retain the union however the voting was boycotted by the baltic republics which were first to declare independence their example inspired other republics to break away fear in the disintegration of the u.s.s.r. authoritarian forces within the country try to oust the gorbachev they attempt at a coup was stopped by boris yeltsin who however did not stop the dissolution of the country on the twenty second of december one thousand nine hundred one yeltsin and the presidents of the then soviet republics of ukraine and belarus met secretly and agreed to dissolve the soviet union. negotiated the release aggression go

you mention to the two people we just saw yeltsin and gorbachev many think that it was the power struggle between those two major political figures that caused the collapse of the soviet union however people claiming to have a deeper understanding of the process say that the root cause was different. course some also say that the collapse was orchestrated by the ninety's stay. it's with the q reason some people believe it was money. they see the country daid economy wise. with that. you know i can't agree with that let me give you a simple example from our time america's foreign debt in dollars and mainly in treasury bonds of course because they don't print actual bills like big seeds its g.d.p. . they are only surviving on credit. the u.s.s.r. had a budget deficit since around one thousand sixty six but then deficit was not properly

reported to the supreme council so no measures were taken. at the same time lots of money was going towards armaments and we armaments. so the deficit was not allowed to exceed the growth of people's savings deposits in spare bunk. one hundred twenty to the time of the new canonic policy bank in the ministry of finance kept tally of people savings in the banks even with a little salary is new for how long an average person had to save up to be able to buy a new coat for his wife we all without a color let alone a car or an apartment people spend their entire lives saving money people knew how to count money they signed the people who were involved in economics had been taught before the war by old school professors they understood inflation and other economic factors these things were easy to coordinate back then with strict regulation of a prices for everyday goods and pensions that was the reason our economic model was

somewhat artificial. he said the soviet union lived on credit indeed this was the case especially in the 1980's when the country subsisted on loans alone the us as a huge foreign debt today so why are the common is telling us that it's wrong they're saying the soviet system was right and what we have today is wrong. it seems like this is seen as the same. initially and most of our loans were only for six months that's when i graduated and started working but by the mid sixty's we were taking out medium turn credits to buy pipes and other equipment we needed to build all in gas pipelines my point is saying what you will about a planned economy we knew how to plan our spending like these things were very strictly monitored. part. of your friend who went on to become finance minister and his government administered if you unpopular reforms in one thousand

anyone people's savings suddenly went bust the bills were taken out of circulation it said it was all very serious to think these measures helps was there any points to these reforms. the point was partly to prepare people for changes they had to realign so they couldn't just do nothing and expect manna from heaven. realized that a price reform would in turn bring reforms of wages and pensions that's why he thought that we might need a monetary reform as well. where it's why he decided to replace fifty to one hundred rouble bills in one thousand nine hundred one. mind you that was not a monetary reform the purpose was to basle counterfeit money. there were a lot of counterfeit bills in circulation. because the gunman's allowed people to

bring copy machines into the country without proper control. the idea was to allow a short period of time when people had to exchange all the fifteen hundred rouble bills they had and those who had too much money would have to explain where they got it. before gorbachev's time despite some problems the soviet economy was producing a huge amount of goods after gorbachev came to power the shelves suddenly turned empty i remember walking into a store in seeing nothing but empty shelves what happened where did all the goods go. do you know about the telegraph that's finance minister a law firm and myself as the bank chairman sent on the nineteenth of august we did because pavel have told us to do it it was asking republics agencies not to delay their payments to the union governments because russia was

holding on to its money russia set up and soon central bank even though it's unthinkable to have two central banks working in the same country with the same currency so russia was delaying its payments she was still working in the state bank and was in the state bank of the soviet union as it was called that was when we send a telegram saying that all money should be transferred to the union government as soon as possible in fact that's where they find me afterwards because they said i supported the coup and the reason russia was holding on to its money was because of the arts and standoff with gorbachev yes and he was trying to evade the grievance that we had concerning the budgets of russia and that of the soviet union from one thousand nine hundred one the government often didn't have the money even to buy currency instead we had to borrow money abroad. this was a real problem. but i don't agree that everything disappeared from the stores and

then magically came back. things don't happen this way. we have to keep in mind that the west was not very eager to lend to russia a ninety ninety one and ninety ninety two. so where do we have to take money from. says says a victim of the former head of the soviet central bank and one of the most renowned bankers and economist in russia spotlight moving back shortly after a break so stay with us don't go back unless one of. the close of team has been on the black sea coast for future developments depends on the good way. no party goes area

first place too many find champions and the most ambitious people. who sometimes ruin the lives of many innocent families across the region. where the oldest city in russia is found clocking in more than five thousand years. to digest on russia close up on our t.v. . welcome back to spotlight i'm just a reminder that my guest on the show today is think that aggression the former head

of the central bank one of the most renowned economist and bankers in russia today . i would like to ask you the following question once again even with the standoff between the ulta ngor which of even with the growing economic hardships that the u.s.s.r. was facing and they contributed much to its breakup can we still say that it was to a large extent if not fully due to the efforts of the west that the process of disintegration gain momentum in the soviet union that the west all prices and that all they could to encourage these developments in the u.s.s.r. well first of all we should say that the soviet union's economy was quite strong down even its defense industry we say the defense industries big in the west but we also had seen the use of saw one of my relatives my younger sister's husband works in the foreign ministry and participated in the very early disarmament talks and she used to say we just can't give the americans and the sensible explanation as to

why the heck we have produced so many assists twenty missiles there were enough of them to blow up three plants like the earth why should we want three times the amount that means that our defense industry kept ordering more and more and more the requests to downgrade to new developments and this was destroying the economy on the other hand the defense industry itself required upgrading new weapons and so on. another thing to say is that in those times as far as i know there was not a single western made piece of equipment in the ceasar some western equipment was purchased for the plans of the ministry of machine building which produced equipment for the defense industry that's how it was much like with china now i recall that the west wasn't particularly eager to sell us any equipment i remember a story when the soviet union was trying to buy some double purpose piece of equipment which led to scandal and we were accused of trying to steal the military secrets rights riots there were so many things the nuclear projects that it should be admitted partially we ourselves contributed to the destructive processes by

getting involved in the arms race although ironically the signing of the nuclear nonproliferation treaty was expedited by the hundreds in bomb test. of former head of the cabinet said in two thousand and ten that the shortage of retail products during gorbachev's rule was actually encouraged and facilitated by simply co-leaders in russia among other things he alleged that yeltsin approved a major reconstruction project to start similar to its twenty four tobacco factory in order to create a surety of tobacco products in the country and use it instead going public with sentiments of the authorities since the people were sensitive to shortage in cigarettes as possible although i should say it wasn't aware of all the details of the economic situation but i can say for sure that the budget was severely hit by the government's decision to increase the price on the boats go and restrict the number of items one customer was allowed to purchase. but. he is the government introduced steve monopoly over vodka sales today would there do

any good to russia's economy. think between please try and reintroduce the order that existed in russia before the nine hundred seventeen revolution in those times was a nickname for interpreters. i recall that name and it came from the tradition for such a businessman to swear in. to the tsar and seal it with the keys on the cross there being that the promise to pay me the value added tax to the states in good faith that's what we can do it doesn't matter which plan produces vodka it's also known that in the old times farmers didn't drink every day they only had what's good for holidays and then when or in the winter time and when the farming season is over they would also make their own spirits too because they could not afford the board because sold of the store. going back to the fall of the soviet union you mentioned . the emergency committee which staged a coup in august nineteenth anyone many prominent in respected people in the soviet

union during their. story which is so i said that the cool was an attempt to preserve the soviet union to counteract the when you go she started by gorbachev would you agree with that. they wanted to introduce a state of emergency which could save the soviet union what is interesting is that had of because a stun was a buyer never reached. he was invited but he must have decided not to go there just in case any politician is supposed to be sly when television cover the one thousand nine hundred one events they interviewed a man by the name of craft he was the chairman of the committee on television and radio crushing care was dismissed shortly after ninety one but he said that the draft decree to introduce an economic state of emergency had been showing to gorbachev when it was being written in april ninety ninety one. the document had to go which of comments on it so it's not true the governor of new nothing about these

plans he knew about them they might not have aligned with them but you could see that the country was heading towards economic problems because of these conflicts with yeltsin and his team. it seems they gorbachev is still holding on to that he could have renewed the u.s.s.r. somehow given it a new lease of life if he had. given the opportunity do you believe in that partial or. maybe generally i have always thought of him as somewhat kook sati. often told us that the one party system was hampering the soviet union and we had seventeen million communists only a fraction of whom were truly committed to the cause so we had to do something about is. all the things he's sands and the things i listen to because i was invited to these meetings by protocol i still think of lack decisiveness his idea was to create

a second party is similar to the labor party or on the basis of labor unions or some other organisations encourage competition in the parliaments but you never got around to making any actual steps towards this i think the conflict started when he dismissed and appointed yeltsin or the yeltsin was hardly fit for the position since you get in bork is very different from moscow. let's be frank put in any good you are also unhappy about the single party system they're trying to change it but no matter what they do they end up with a model communist party on their hands it is true you know it might be in our genes first we are the root kids then ivan the terrible reforms and atrocities disrupted the system. then there are miners came along yes the remind of dynasty they're not even the best candidates they just have the pantry arc as an uncle so this standard rule in the country i think every region degrades over time need to be replaced but it should be done constitutionally people are right today when they say we should

have not a majority in parliament that's going to turn down any outside initiative. republics including the second largest of them ukraine started clearing sovereignty one after another i remember that very distinct feeling there was in the air in both sides we were seeing let them go we're only a few. anyway they thought they would become immensely rich after they secede for some reason this is not happening. were the politicians educating secession in the states lying to their people. the problem is that some politicians in the party did not have a clear idea of the economy is which was actually the reason why not survive and kareem of did better than the rest of them by a friend of steel mill then went on to become a minister than the prime minister karim of. finance ministry they had a better understanding of their own economies and their problems now that is take a look at the soviet union's budgets when we were discussing the possibility of

uniting with valerie's people told us why would we want to lose i told them take a look at the last few budgets of the soviet union and you will see that the only two republics were self-sufficient economically russian belarus even ukraine got subsidies from the union budgets as the military and defense industry was too large it was huge in fact i thought ukraine would do best after the union collapsed. there was my opinion but i was wrong ukraine can down its defense budget but would not say their life has become better if we stopped funding them did not get better why is there they have been buying food from bell routes we all thought we would end up with a better economic situation but it didn't happen why is that miracles don't happen you know we long to believe in fairy tales we have plenty of them. something of that sort happened in the baltic states they never left the union you know the ask

for permission to conduct an economic experiment to conduct their own economic policy the use of sas to print council was against it. came in and convinced them to land the baltic states have a try. when the soviet union collapsed you change your position from head of the u.s.s.r. central bank to head of russia's central bank no. i first spent some time working for stony slush a time in the foundation but when they could not balance the central banks budget for ninety nine to one and the deputies go down in particular were a little angry with the previous hand they dismissed him and hired us although he was by no means a stupid man they needed someone who could do math i said i would only come with the allowed me to bring my sim along when i spoke to mr grade or more people from his team they would always claim that russia only had in a food to last for two days when they came to power they claim they sealed russia from fam in is it true that i was not the minister of food but i think it is

a lie so it is not true that the country was on the brink of starvation. and would spend a hundred million euros dollars worth of foreign consumer commodities there would be distributed between major cities. we did not buy enough and that was why people would look for underwear from germany or shoes from czechoslovakia we simply did not only get enough money for it. russia went through a phase of so-called barbaric capitalism after the soviet union fell apart was there ever an alternative to that war could the transition have been made smoother . do you remember of former polish presidents less well and of course they had of the solidarity trade union he had a good economic advisor. and although he went down the liberal party to poland but poland was very different from the soviet union as an undivided country with

a single religion. which was a guest in one of our shows mr learned so one sense that he had never thought the transition from a pro socialist system which poland out of the time even with free agriculture and trade that this transition to the market economy would be such a painful process he said it was the same as trying to make a good fish soup with fish from your fish tank i could not put it better myself. thank you very much for being there reminded that my guest today was that get out of the form of the soviet central bank and the third put up or more of your spotlight will be back with more until then they are to. take. you.

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