Valentin Sergeyevich Pavlov

Valentin Pavlov, born in Moscow in 1937, was a finance official out of the Moscow Finance Institute. Starting as a junior inspector in the finance ministry, he rose through the budget directorate and the finance side of Gosplan to chair the State Price Committee in 1986 and become finance minister in 1989. He was that rare case of a man reaching the top on a purely fiscal career, neither party nor army, and few knew the tangled interior of the Soviet price system as he did.

For that very reason he saw the catastrophe earlier than most. He knew in figures how the anti-alcohol campaign's lost revenue, the partial reform that freed wages while freezing prices, and the swelling subsidies were eating the budget. Yet the conclusion he drew was not marketisation but the restoration of control. In his eyes the radical reformers were agitators ignorant of economics, and Western advice a stratagem to dismantle the Soviet Union.

In January 1991 Gorbachev made him head of government in Ryzhkov's place, the title changed from chairman of the Council of Ministers to prime minister. The first and last man in Soviet history to bear that title had eight months left.

Appointed premier on 14 January 1991, Pavlov waited just eight days before dropping a bombshell: on the evening of 22 January he ordered all 50- and 100-ruble notes withdrawn and exchanged for new bills within three days. Only days earlier he had publicly promised that no monetary reform was coming. The exchange window ran from 23 to 25 January: a mere three days. Individuals could swap only up to 1,000 rubles immediately; any excess had to go before special commissions, with decisions promised by the end of March. The government claimed it was targeting 'shadow capital' and ruble hoards stashed abroad, but the reality hit ordinary citizens hardest: wages had just been paid in the very notes now being demonetised. Panic swept the country: citizens besieged savings banks, and elderly people were especially terrified of missing the deadline. By 26 January only about 40 billion of the 48 billion rubles in circulation had been surrendered. Meanwhile fresh emissions soon outpaced the recalled sum, and the attempt to stabilise the consumer market collapsed. A second wave followed on 2 April, when Pavlov's cabinet raised most retail prices two- to threefold.

On 18 February 1991 Pavlov presented the Supreme Soviet with a programme for retail price reform. In its figures it differed from Ryzhkov's earlier programme, but not in its essence: the shops were already empty and a strike wave had begun across the country.

On 2 April the government raised prices. By official estimates the increase was 65 to 70 percent, but the prices of goods actually available in the shops rose two- to threefold. The range of goods did not widen either, for wholesale depots stood empty, and goods soon became scarcer than before the increase. Earlier, on 18 April, Pavlov had discussed the programme with leading economists, who noted that it contained almost no figures and that a series of recent government actions had deepened doubts at home and abroad about the government's willingness to pursue market reform.

On 19 April a joint session of the economic committees and commissions of the USSR Supreme Soviet merely 'took into consideration' the government's anti-crisis programme without adopting it. The programme included a ban on strikes, a special management regime for the energy, transport and communications sectors, and the restoration of 'necessary regimes of labour duration'; what was actually enacted that day was a different law altogether. The law 'On Employment of the Population', adopted the same day, abolished compulsory job assignment after graduation, removed criminal liability for parasitism, and recognised unemployment.

By spring the central government had lost its levers. No one trusted it any longer, from the striking miners to the leadership of the union republics; foreign creditors stopped lending, and the government's actions became increasingly chaotic. The reform was crippled from within and without by the union republics that failed to follow orders and by widespread local monopolies that set their own definitions of luxury goods and charged higher prices for them. Back on 1 January the government had freed 40 percent of prices and introduced a 5 percent sales tax, yet, according to Philip Hanson, it was that republican non-compliance and local monopoly power that undermined Pavlov's reform. What his cabinet actually achieved in the months from February to July was chiefly to confirm the loss of control.

In April 1991 Pavlov raised retail prices by an average of more than 60 percent, the first sweeping official increase since 1961; compensating payments halved its fiscal effect, and only the public's trust was lost. In June he went before the Supreme Soviet to demand emergency powers letting the government legislate past the president, and in closed session Kryuchkov, Yazov and Pugo backed him. The affair, dubbed an attempted constitutional coup, was voted down, but it announced to the world the fissure in the leadership and the hardliners' resolve.

In August Pavlov put his name to the State Committee for the State of Emergency. From the coup's second day, however, he effectively dropped out with a hypertensive crisis; several accounts say heavy drinking. The premier who had joined emergency rule to avert fiscal catastrophe could not endure even its three days.

After arrest and the 1994 amnesty he lived as a private bank president and economic consultant, dying in 2003 at sixty-five. In his memoir he asked whether the chance had been lost, insisting his prescription had been right. Economic historians mostly judge the opposite: his currency confiscation and price rises destroyed savings and trust, hastening the very collapse he meant to prevent.