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Between 1917 and 1930, homosexuality was decriminalised in the Soviet Union. From the Wikipedia article on LGBT history in Russia:

The Russian Communist Inessa Armand publicly endorsed both feminism and free love, but never directly dealt with LGBT rights.[6] The Russian Communist Party effectively legalized no-fault divorce, abortion and homosexuality, when they abolished all the old Tsarist laws and the initial Soviet criminal code kept these liberal-libertarian sexual polices in place.[7] During this time, openly gay persons were able to serve in Russia's new Soviet government.

Yet, the legalisation of private, adult and consensual homosexual relations only applied to Russia itself. Homosexuality or sodomy remained a crime in Azerbaijan (officially criminalised in 1923), as well as in the Transcaucasian and Central Asian Soviet Republics throughout the 1920s.[8] Similar criminal laws were enacted in Uzbekistan in 1926 and in Turkmenistan the following year.[9] Criminalisation of homosexuality during this time was exclusive to nations of the Soviet Union associated with "cultural backwardness."

The Wikipedia article really only considers the legal situation, apart from the unsourced statement openly gay persons were able to serve in Russia's new Soviet government.

What was the situation for gays in this time period in practice, specifically in the RSFSR? Did the fact that homosexuality was legalised as one of the first countries in Europe mean that it was a preferable place for practicing gays to be compared to countries in Western Europe. In Western Europe many countries didn't legalise homosexuality until decades later? Or was this just a law that looked nice on paper, but had no meaning in practice?

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    @Felix Goldberg how the Provisional Government could create the RSFSR criminal code?
    – Anixx
    Feb 26, 2013 at 1:19
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    One big problem with this question is that "gay" culture and identity is a Western post-1968 phenomena—any answer will have to respond within a theoretical framework of the nature of human sexuality. Another problem is that the very real distinction between formal and substantive freedom requires an answer that uses a theorisation of human freedom. Within these limits, that any answer will be embedded in a particular discourse of what sexuality and liberation are, the question is answerable. Feb 26, 2013 at 3:02
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    @jwenting any sources about millions in mental hospitals? Any sources that mental patients were used for hard labor?
    – Anixx
    Feb 26, 2013 at 18:24
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    I'm suggesting that your terms are anachronisms meaning that your question is unanswerable as there was no "gay" situation in 1917. Feb 28, 2013 at 2:02
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    As I have repeatedly said above, "Homosexuality" has specific meanings in English and didn't exist prior to the 19th century. Much like "gay" didn't exist until sometime between 1950 and 1970 in North America. Men have been fucking and loving men; and women have been fucking and loving women; in all kinds of ways throughout history, but the term "homosexual" reduces this to a specific historical cultural and sexual set of practices (in English). There are no transhistorical sexual categories, see any of the modern sexologists or historians of sexuality. Feb 28, 2013 at 20:21

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This looks like a great area for more research. The question makes the important distinction between what is found (or in this case, not found) in law, and what actually happens in practice. This is especially the case when we are talking about Soviet law. Below I'll summarize what little I could determine from these three sources:

  1. Sex and Russian Society edited by Igor Kon and James Riordan
  2. Sexual Revolution in Bolshevik Russia by Gregory Carleton
  3. Homosexual Desire in Revolutionary Russia by Dan Healey

In (1) this is discussed primarily on p90-91. The overall emphasis seems to be that during this early period, was that the Bolsheviks did not put much active emphasis on the issue. It notes that Anarchists and Cadets "officially proposed" revoking legislation against homosexuals while the Bolsheviks took no position. However, its absence from the Russian Criminal Code in 1922 and 1926 effectively decriminalized it, as you pointed out.

In terms of practice (1) merely mentions that a group of homosexuals that referred to themselves as the "blues" included (according to one source) prominent figures such as Foreign Affairs Commissar Georgi Chicherin (also mentioned in the short article in @Emanuele's answer and probably the source of the official in government you quoted), poets like Mikhail Kuzmin, Nikolai Klyuev, Sofie Parnak, and director Sergei Eisenstein. While not illegal, towards the key early 1930s turning point it was increasingly pathologized, rather than seen as a crime.

In (2), Carleton points to the surprising defense of freedom in sexuality in a 1927 work called Sexual Crimes arguing that it did not violate anyone's rights (p60). Later, however, it emphasizes the diversity of opinions in the writings of early Soviets with some seeing as "outside the proletarian norm" (p78) or "were no longer authentic members of the proletariat" (p142) while others, such as Israel Gelman, who studied the sexual behavior of postrevolutionary youth, called it as a "sickness" and "perverse" but not to be condemned or persecuted.

(3) by Healey, is perhaps the most cited book discussing this issue during the period you are interested it. As also true with (1) I had limited access to it through Google Books. Chapter 4 and 5 are of interest to your question. Healy argues as others have, that "the silence in the penal code...offered new opportunities for medicine in an area formerly dominated by police approaches" (p148) There is a lot more here but I am not able to get access to it. A review of the book in The Journal of Sex Research Vol. 39, No. 3, Aug., 2002 by Stephen O. Murray (limited access: http://www.jstor.org/stable/3813622), p247 which argues that Healey goes beyond what his sources can show him. He questions Healey's effort to locate "clear intention" to remove sodomy from the criminal code or an "explicit decision". Murray points out that 1922-1933 there was "no single official position on homosexuality" in the "Slavic heartlands" but "treated with suspicion as being 'unproletarian'...decadent bourgeois behavior," and he also quotes German sex-reformer Magnus Hirschfeld visiting in 1926 as not seeing "any open organized group of homosexuals in the new Russia and that Soviet journalism and literature were silent about the question" - which he contrasts with liberal late Czarist Russia.

These three works give some hints, but I didn't find much mention about the lived experiences and practical impact of the [lack of] policy on homosexuals on the ground. Some of this may be covered in Healey sections I was not able to view. Beyond laws, of course, the discriminations faced on a daily level or the need felt by individuals to conceal their sexuality is another matter that may be difficult to find through available primary sources. There may be extensive literature in Russian on this, and hopefully someone can contribute with more on this.

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