On 2 September 1991, the Congress of People's Deputies voted overwhelmingly to dissolve the existing union of 15 Soviet republics, permit the Baltic republics and any others that wished to go free, and prepare for an economic confederation in its place.
The move, described as no less dramatic than the suspension of the Soviet Communist party 10 days earlier, adopted a new structure of power giving radically new rights to the republics. Deputies acted after hearing a report on a crisis meeting held in the Kremlin between President Gorbachev and representatives of 11 republics. Kazakh president Nursultan Nazarbayev read the report, which stunned deputies.
New power structure proposed
The report turned the existing system of Soviet power upside down by proposing three new bodies in place of the present parliament and union government. A state council, consisting of President Gorbachev and leaders of republics signing the union treaty, would handle foreign and domestic policy. An inter-republican economic council would manage the economy and bring in reforms. In place of the parliament would be a senate of 20 representatives from each republic.
Republics would be offered a Soviet Union a la carte. Each could join a political union by signing a union treaty, but would be free to decide later on full or associate membership. Alternatively, it could go free, in which case the congress would support its application for membership of the United Nations. All 15 republics, even if opting for independence, would be eligible to join an economic union aimed at maintaining a 'single free economic space'. They would also be invited to sign an agreement on 'collective security' to maintain a single army and a single 'military-strategic space'.
Political implications
An editorial noted that the Soviet map was transformed with such devastating effect that it could never be undone. While the hand holding the pen might be that of the Soviet President, Gorbachev was being firmly guided from behind by a coalition of interested republics, among whom Russian President Boris Yeltsin wielded the most effective grip. The new proposal granted by implication the right for any republic to secede, appearing to be an entirely facultative exercise in which only those republics 'which wish to' would sign the Union Treaty.
Politically, the proposal was seen as a brilliant sleight of hand for the newly reconstituted Gorbachev-Yeltsin alliance, with Gorbachev salvaging a Union cleansed from everything which made it objectionable.
Congress approves confederation plan
After three days of intense argument, the Congress approved Gorbachev's plan to replace the centralised Soviet Union with a loose confederation of sovereign states. The a la carte plan envisaged a multi-tier structure allowing republics to decide the extent of their relations with central government while retaining the armed forces under a single military command. The confederation plan was drafted in overnight negotiations between Gorbachev and representatives of Russia, Ukraine, Armenia, Byelorussia and six other republics.
The Baltic states and Moldova refused to take part in the discussions, while Georgia attended with observer status. The plan caused great suspicion and disagreement in the Congress, with representatives of several republics and nationalities objecting to aspects of the proposals and many deputies opposing their own reduced role. After warnings from Gorbachev that a decision had to be made quickly, the Congress passed a law suspending parts of the Soviet constitution and substituting a three-part interim government structure: a parliament, a State Council, and an Inter-Republican Economic Committee.
Independence moves and regional unrest
Prospects of independence for the Baltic states increased rapidly during the week when the United States announced its recognition. Estonia, Latvia and Lithuania applied for membership of the United Nations. Azerbaijan declared its independence from the Soviet Union, and Russians in Moldova, which had declared its independence the previous month, set up a separate republic of the Dniester.
In Yugoslavia, Serbian rebels and government troops captured most of the eastern Croatian region of Slavonia, in which many Serbs live. The Slavonian capital, Osijek, was the centre of heavy fighting in which at least 16 people were killed, with seven more deaths reported from Pretinje, south of Zagreb. Road and rail links between Croatia and Serbia were completely severed.



