Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 4, 1994 TAG: 9402050013
SECTION: EDITORIAL PAGE: A7 EDITION: METRO
SOURCE: MARSHALL I. GOLDMAN
DATELINE: LENGTH: Medium
The minister of finance, Boris Fyodorov demands that he also be a deputy prime minister and that the head of the Central Bank be fired.
The prime minister, Viktor Chernomyrdin, resents being told whom to fire and appoint, particularly since the Central Bank's head is his old buddy. Besides, Chernomyrdin blames much of the country's economic discontent and the rise of the nationalist Vladimir Zhirinovsky on Fyodorov.
There's also the issue of whom to blame for setbacks to Russia's economic-reform process. Some critics have blamed the International Monetary Fund and the other international lending organizations for not being more forthcoming with economic support. This, they insist, would have eased and underwritten the way to reform.
Others blame Washington, particularly Ambassador-at-Large Strobe Talbott, who, shocked by the December elections and the victory by Zhirinovsky, called for ``less shock and more therapy.'' These misleading signals were said to convince President Boris Yeltsin that we in the West really didn't care much about a serious reform effort.
But back at the Kremlin, Chernomyrdin, having rid himself of Fyodorov and Yegor Gaidar, an equally outspoken reformer, found himself under attack from Western lending agencies. Reversing himself, he refused to accept Fyodorov's resignation but still refused to accept his terms so, ultimately, both Chernomyrdin and Yeltsin decided to let him go.
Throughout the episode, Chernomyrdin continued to insist he remained devoted to economic reform and the fight against inflation. In the same way, everyone in the U.S. Congress mouths support for health reform. We shouldn't take either assertion seriously. Nor is it reassuring when Chernomyrdin calls for renewed emphasis on increasing industrial output and the use of administrative controls to restrain wage and price rises. That means at least a partial throwback to the old days of central planning.
While Western support is certainly important, it is egotistical to think that comments by foreign officials will determine whether the Yeltsin government commits itself to reform or not. Those who argue this way evidently disregard the election and the rebuff suffered by those associated with reform. They blind themselves to the fact that the vote reflected Russians' anger over the negative impact of the reform.
Some Western observers insist the reforms are not the fault of the reformers but of the Russian Central Bank, which sabotaged the process by printing too much money.
Certainly, the Central Bank did not support the suspension of credits, for fear that the nation's industrial enterprises would have to fire millions of workers. What is not usually acknowledged, however, is that Yeltsin and even Gaidar also contributed to the busting of budget restraints. On Dec. 11, for example, the day before the election, Yeltsin announced that he had decided to increase pensions, state and military salaries, subsidies for agriculture and energy production and also to lower income taxes.
On top of that, the government has already spent $70 million on rebuilding the parliamentary White House, wrecked by gunfire in October, and plans to spend $500 million more to build a new parliamentary building. What is the point of providing international financial support if the proceeds are to be squandered?
There is little about Russia's new government policy to suggest that economic reform will come sooner than later. Inflation is a greater threat than ever before. Yet, if accompanied by an effort to set up private farms or businesses, a slower-paced reform need not be all bad.
While the odds that the new government will support such changes are poor, nonetheless a new approach might relieve some of the tensions that have been built up and make possible some institutional changes that need time and a calmer environment. Yet, given the hostile reaction to the reform process itself, the prospects for economic improvement are dim, and it is likely to take many years before the Russian people are ready for a new cycle of reforms.
One thing is certain, however: It is arrogant and costly to demand that Russia commit itself to radical reform when the institutional changes need to implement such reforms are not in place.
\ Marshall I. Goldman, a professor of economics at Wellesley College, and associate director of the Russian Research Center at Harvard, wrote this for Newsday.
\ L.A. Times-Washington Post News Service
by CNB