Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, October 31, 1993 TAG: 9311030392
SECTION: HORIZON PAGE: C1 EDITION: METRO
SOURCE: JOHN-THOR DAHLBURG LOS ANGELES TIMES
DATELINE: MOSCOW LENGTH: Medium
The genesis of his biggest blunder came in the fall of 1991 when his presidency was only 4 months old, and the leaves of the ghostly birches ringing Moscow were turning gold. In Government Dacha No. 15 at Archangelskoye, in the wooded hills near the Moscow River, a group of young men, their average age 35, assembled with dread and excitement in their souls to discuss how to do away with socialism.
Their leader was an improbable figure. Yegor Gaidar was a rumpled, roly-poly academic with soft brown hair and a face as rotund as a pumpkin. Among free marketeers, his pedigree was unique: his paternal grandfather had enlisted in the Red Army at 14, risen to command a regiment and had a Marxist muse who inspired him to pen a children's classic of collectivist morality, ``Timur and His Team.''
Gaidar came into the Yeltsin circle almost by chance, he said. On the first day of the failed August 1991, hardline Communist putsch in the last months of the Soviet Union, the young economist, head of a Moscow-based think tank, hurried to the Russian Parliament building, the White House, with other pro- reform figures to show support for Yeltsin. While awaiting an armored attack that never came, Gaidar made the acquaintance of Yeltsin's closest adviser, Gennady Burbulis. That autumn, as it became obvious that the Soviet Union, its government and economy were doomed, it was Burbulis who spurred work on economic-reform blueprints and who attended interminable skull sessions, bringing along other figures from the Russian government.
As the academics debated, the Soviet state-run economy - which had supplied the Red Army with Katyusha rockets against the Nazis, which had put the first man and woman in space, but which couldn't produce a decent pocket calculator - was perishing. The fear of a cold, hungry and restive winter loomed.
``It was a crucial situation, and quite a few people were panic-stricken,'' Gaidar recalled. His response was to enunciate two goals. First, to stimulate output and curtail the shortages that made the Russian consumer's life an eternal purgatory spent waiting in line, Gaidar wanted to abolish government- fixed prices on virtually everything from four-door Zhiguli sedans to canned eggplant. Increasing taxes and cutting state spending also would stabilize the economy.
Second, Gaidar hoped to lay the institutional groundwork for privatizing Russia's state-owned enterprises and stores and forming a nationwide marketplace of independent buyers and sellers, with the exact model to be decided upon later. The pudgy theoretician wanted Russia to make a clean break with his grandfather's credo.
Some economists believe Gaidar went too far too fast, others (Gaidar included) that he wasn't bold enough. Judy Shelton, a supply-side economist for the Hoover Institution in Palo Alto, Calif., believes Yeltsin, like former Soviet leader Mikhail Gorbachev, fell into the seductive trap of counting on billions of dollars in Western aid and wrongly re-tailored his agenda to conform to the International Monetary Fund formulas.
To maintain the budget deficit recommended by the IMF, Russia had to keep most of its state-run stores and factories generating revenue, which meant slowing d own privatization. Gaidar, who was sacrificed by Yeltsin last December and restored to the Russian Cabinet last month, now has the advantage of hindsight. Russia wrongly kep printing rubles for itself and other ex-Soviet republics, he says, losing control of its money supply.
by CNB