On the brink in Russia

As Russia grapples with a serious economic, political and social crisis, Boris Yeltsin makes a desperate bid to save his skin.

ANURADHA M. CHENOY

BORIS YELTSIN has repeatedly played czar during his presidency. In times of crises, he has routinely sacked and replaced Ministers in order to shift the blame from himself. Prime Minister Viktor Chernomyrdin, sacked unceremoniously five months ago for being "incompetent" and too slow with reforms, has been reinstalled as Prime Minister, subject to parliamentary approval. Sergei Kiriyenko, who replaced him then and was projected as a young, dynamic reformer, has been peremptorily dismissed. But this round of dismissals and reappointments has raised serious questions about Yeltsin's judgment and political capability, even among his supporters. Rumours of Yeltsin's resignation are rife, his grip over the system is visibly unsteady, and his political future is bleak. This is more so because the Russian economy is crumbling and its political system is in jeopardy.

In the first round of voting on August 31, the Russian Duma, the Lower House of Parliament, where a Communist alliance calls the shots, rejected Chernomyrdin's candidature by an overwhelming majority of 253 to 94. And on September 2, it urged Chernomyrdin to withdraw his candidature for the prime ministership. A Duma resolution, which was approved by 255 votes to 40, said: "Your voluntary withdrawal from the post of Prime Minister could ease the situation and start the quest for a compromise." The resolution added that the attempt to push Chernomyrdin's candidacy had led to a "fierce confrontation between branches of power," and warned that Yeltsin's bid to railroad his candidate through Parliament was "doomed to failure". Chernomyrdin dismissed the request and forwarded a list of six Ministers for appointment, subject to confirmation.

The Duma does not have confidence in Yeltsin. It has been asking for substantive changes in the Constitution and wants a bigger say for itself in policymaking and governance. The Constitution, drafted by Yeltsin, gives the President enormous and unparalleled powers. There is no system of checks and balances. The Duma, where the Communist-led alliance is in a majority, is critical of the economic reforms and the impact they have had on the Russian people. It believes that the reform process has destroyed the infrastructural backbone of Russian industry and agriculture. Now that Yeltsin is at his weakest, the Left-wing alliance wants to use the opportunity to maximise its powers so that the Duma can influence the course of the Russian transition.

This is a critical period for Yeltsin. He wanted to present the image of a vigorous and powerful President, in the light of U.S. President Bill Clinton's visit to Moscow. Yeltsin wants the U.S. to pull Russia out once more from the deep financial pit it is in. A U.S. bailout is complex. The position adopted by Russian nationalists and Russia's interests in West Asia and the Third World forced Yeltsin to criticise the U.S. attacks on what it called terrorist bases in Sudan and Afghanistan. Yeltsin has refused to back away from the Indo-Russian defence treaty despite expressions of displeasure from the U.S. He has in the past criticised U.S. foreign policy positions on the former Yugoslavia, Iraq and so on.

ITAR-TASS/ AP
President Boris Yeltsin with Acting Prime Minister Viktor Chernomyrdin at the Kremlin. Russia's economic collapse is merely one symptom of a deep-rooted political and social crisis.

At the present juncture, the dominant section of the Duma and the people of Russia oppose the International Monetary Fund's reform programme that has led the country into the current impasse. If Chernomyrdin is to reinforce his position and gain the confidence of the Duma, he will have to work out a compromise, as part of which he may have to enter into a coalition with the Communists. The reforms are likely to take a new direction. Hardliners within the U.S. establishment and financial experts see the Russian economy as a bottomless pit and the Russian Government as being not pliable enough. In these circumstances, a long-term U.S.-Russian deal is difficult to work out.

The Duma has in the past warned Yeltsin of such a situation. It rejected Kiriyenko's nomination as Prime Minister, opposed his strategy of further reforms and sought the formation of a coalition government. Yeltsin bullied Parliament into accepting his nominee by threatening to go for elections, and rejected parliamentary proposals. Five months later, Yeltsin has been forced to retract. The reasons are not far to seek. The scale of the financial crisis has loosened Yeltsin's grip on the presidency. The Opposition has linked the crisis with Yeltsin's method of reform and choice of reformers. The Russian citizen, deprived increasingly of basic necessities, is beginning to have serious doubts about the system.

Russia has defaulted on the repayment of 250 billion roubles in short-term internal debt. It has admitted that it cannot settle over 11 billion roubles in back wages, 25 billion roubles in defence contracts and 16 billion roubles in welfare payments. These figures are small compared to its external debt. With industry and agriculture in decline, people in Moscow and elsewhere depend on imported food. Russia's GNP is dominated by the shadow economy and the barter system has largely replaced trade. The Russian Central Bank has suspended all foreign currency trade since the country is on the verge of massive money outflows and hyperinflation. In the Ural regions, striking miners blocked railroads in protest against non-payment of wages. Government officials could not withdraw rouble salaries from the bank. Armed clashes have begun in the North Caucasus; military action in Afghanistan threatens the border of the Commonwealth of Independent States. Ultra-nationalism is finding new political spaces.

CAUGHT in a situation where the financial collapse is just one symptom of a deep-rooted political crisis, Yeltsin wants to continue with the reform process along the lines laid down by the IMF and the World Bank. But to survive Yeltsin will require the support of the Duma, which however is determined to pull him down. In the past, he repeatedly bypassed it and took policy decisions unilaterally, but today he will need to compromise with the Duma. He needs to combine the support of the Russian oligarchs with popular support. If this does not happen, he will need to make a graceful exit.

ALEXANDER ZEMLIANCHENKO/ AP
Communist Party leader Gennady Zyuganov. The Left-wing alliance in the Duma wants Parliament to have a greater say in governance, and a new economic policy with greater state intervention.

The only politician who can help him with this agenda is Chernomyrdin. Yeltsin has great expectations from Chernomyrdin. With his experience as Gazprom director from 1989 to 1992 and his image as a tough Prime Minister for five years, Chernomyrdin has proved to be a skilful Kremlin player who compromised with the Duma when it became necessary and managed to secure the support of state bureaucrats and some financial oligarchs. He compromised by going slow on the IMF's reform package and placed a greater emphasis on the state than the radical reformers advocated. But this is the package that Yeltsin now requires to bail himself out.

Chernomyrdin has tried to work out a compromise with the Communists by negotiating a political pact. Parliament will have the right to confirm the appointments and dismissals of Cabinet Ministers. There will be no parliamentary elections for the next 18 months. Parliament in turn will not move a no-confidence vote against the President. But the Duma is not satisfied with this package. The Communists are concentrating their efforts on taking full control over the Duma and making it a more powerful body, since they cannot count on winning the presidency as yet. Communist leaders Gennady Zyuganov wants the reference to the President as the guarantor of the Constitution to be dropped. A 'political pact' may be worked out before the Duma votes for Chernomyrdin, if that happens at all. The state of the negotiations between the Government and Parliament reveal that the parliamentary system is gaining more legitimacy than ever before.

Chernomyrdin has many tasks ahead of him. To overcome the financial crisis, he needs to secure the support of the Duma. The President can send the Prime Minister's name to Parliament three times for confirmation. If the name is not confirmed the President can dissolve Parliament. But Yeltsin's position is weak and he cannot risk early elections. The Duma may also threaten the President with a vote of no-confidence in him. Chernomyrdin may thus continue to hold talks with both Houses of Parliament to secure their approval for his nomination and to work out a compromise formula on the reforms and the financial crisis. The Duma is demanding greater state intervention and a new economic policy, which will include measures such as price control and a halt to convertibility. It also wants a role in the Government as part of a coalition that will include nominees of the Communist Party. Zyuganov is demanding a greater role for the Duma and for the Communists.

A tripartite commission which was set up to hold talks between the two Houses of Parliament and Chernomyrdin is negotiating a deal under which Parliament would secure greater powers in exchange for immunity from prosecution for the President once he stepped down. Chernomyrdin wants the Duma to pass legislation guaranteeing Yeltsin's special status and his personal and financial security. A life senatorship might be offered to the President if a constitutional compromise is effected. The post of Vice-President may also be restored to ensure a smooth transfer of power. But much will depend on the compromise effected. The Communist alliance is in no mood to be bullied. In its political battle with the President, it is nearer victory than ever before.

MAXIM MARMUR/ AP
Down and out in Moscow. The latest economic crisis has pushed many more people in Russia into poverty.

IF he is confirmed as Prime Minister, Chernomyrdin may make a bid for the presidency in place of Yeltsin who has been ailing for some time. This was the underlying reason for his removal five months ago; at that time Yeltsin, the "comeback king" of Russian politics, reasserted his position after weeks of political and personal weaknesses. The Communists would like to stop Chernomyrdin's bid for power, since Zyuganov will be in the race for the presidency.

Another rising star on the political horizon is Gen. Aleksander Lebed. A former ally of Yeltsin who was dumped, Lebed is now the elected Governor of a Siberian region, which is facing a similar financial crisis. Chernomyrdin could work out an alliance with Lebed; this is especially because Chernomyrdin, although a past master in Kremlin intrigue, is a poor communicator and is not very popular with the people. Chernomyrdin's special ally is Alexander Shokin, who could be the possible Finance Minister. Since Yeltsin has sacked Anatoly Chubais who was the chief debt negotiator, Chernomyrdin will have a free hand in choosing his Cabinet.

During the Clinton visit, Yeltsin once again warned of the threat of ultra-nationalism, the return of hardcore Communists, and the possibility of "irresponsible forces" taking control over nuclear weapons. But attempts to extract aid on this count have not worked as well as they once did. As on July 12, Russian banks owed international financial institutions $19.2 billion. After the recent devaluation, the rouble lost 40 per cent against the German mark. There is thus a turnabout from Russia's most reliable economic partner. Without substantial aid, inflationary trends will increase in Russia. This would subject the Russian people to even greater misery. Already over 40 per cent of the people are below the poverty line. The latest crisis will force more of the middle class into poverty. Social stress has already led to a rise in crime and alienation. The seven banks that control large financial interests will tighten their control over the economic and political system. Industrialist Boris Berezovsky, who has had a hand in most political changes, is being called the new Rasputin.

Russia today is grappling with an economic, political and social crisis. The foundations of the new economic and political system are in jeopardy. It is high time that the Government and its various constituents reconsidered their strategy and chose a new and creative road to development, one that will take into account the mistakes of the past with a view to the future, where institutions and the common people, rather than the mafia and oligarchs who control Russia today, will be strengthened.

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