That will be very tough. Yeltsin’s retreat from reform has turned into an all-out power struggle. By naming Chernomyrdin, an industrialist who disdains the chaos of free prices, Yeltsin conceded the end of “shock therapy,” Russia’s unchecked plunge into free-market capitalism. But in the hope of continuing the reforms, he instructed Chernomyrdin to persuade the liberal young ministers who served under former prime minister Yegor Gaidar to stay on. Now Chernomyrdin seemed to be disobeying. Said one ministerial aide: “Yeltsin realized that if he didn’t get back, he could end up a figurehead like the British queen.”
Yeltsin had hoped shock therapy would break the old Soviet command system and rebuild the country with popular backing. But soaring inflation sapped that support, and the Congress of People’s Deputies, full of communists and nationalists, outmaneuvered Yeltsin in its recent session. Now even the liberals are turning against him for making too many compromises. Whatever the new government’s makeup, Yeltsin will have to work with disgruntled apparatchiks and enterprise managers to prod Russia toward what will probably be a hybrid-part command system, part free market.
Yeltsin’s choice of Chernomyrdin to replace the more radical Gaidar reflected just how much power the Russian president has lost. He may have realized that if he renamed Gaidar in the face of heavy opposition, he would be blamed for exacerbating the political crisis-and potentially allowing the hard-liners to take power. Members of the Gaidar team also say Yeltsin himself had come to doubt Gaidar’s policies. Says Sergei Stankevich, one of Yeltsin’s advisers: “Psychologically, Yeltsin’s already prepared for a new stage which will not be a radical liberal crusade.”
The new prime minister quickly assured the world that he backs reforms and that “there is no road back.” But unlike Gaidar, whose economic experience was all theoretical, Chernomyrdin rose through the state-run energy sector. His promises of support for industry suggest he plans to avoid bankruptcies and continue subsidizing Russia’s decrepit socialist enterprises-a road that could lead to hyperinflation. “Chernomyrdin is not fluent with macroeconomic management,” says Yevgeny Gorkov, deputy governor of Nizhny Novgorod, which is pioneering Russia’s experiment with privatization. “He doesn’t realize that you can’t jump from socialism to capitalism without intermediate steps that are unpleasant.”
The crucial question will be how Chernomyrdin handles the privatization of Russia’s industry. Young economists at the State Committee for Property plan to launch privatization campaigns in 15 locations by January in the hope of making the reforms irreversible. But conservatives are already trying to bastardize the process by handing over as much as 90 percent of factories’ shares to worker collectives, which basically still answer to their old-time directors. The privatization team wants to avoid both nomenklatura (elitist) privatization and socialist-style privatization, where the workers “own” the factory-but can’t sell the shares.
Russia’s new leadership may be less sympathetic to the West than Yeltsin’s former colleagues. Andrei Kozyrev, the liberal foreign minister, shocked an audience of Western officials in Stockholm last week by making a speech reminiscent of the cold war, then explained that it was intended as a warning of what might follow if the conservatives take over in Moscow. And Kozyrev is indeed one of the cabinet members most likely to lose his job. Conservatives charge that he has been too weak in upholding Russia’s interests. Apparently hoping to dispel fears in the West, Yeltsin announced in Beijing that he and Bush will hold a summit in Anchorage in January to finalize the START II agreements. But puzzled U.S. officials said that both the START deal and the summit were still in negotiations.
Yeltsin faces another bout with Congress again in April. At that point, a referendum on a new constitution could abolish the Congress. But Yeltsin may have to contend with his enemies until their term ends in 1995. Reformers hope a reversal of Russian policies would be too politically explosive. But perhaps inevitably, the heady days of radical reform are gone. For now, Russia’s, and Yeltsin’s, fate is tied to the heavy-industry bureaucrats he tried, but failed, to break.
