Russian reformer defends actions in Balto. speech

May 06, 1994|By Joel Obermayer | Joel Obermayer,Sun Staff Writer

Former Russian Prime Minister Yegor Gaidar makes no apologies for the radical economic reforms he enacted in 1992 and 1993, even though the backlash against them forced him out of Russian President Boris Yeltsin's cabinet in January, and he says his country needs more of the same.

"We should continue to be as aggressive as we can," he said in a speech to the Baltimore Council on Foreign Affairs at the Belvedere last night. "Attempts to slow down [the transition to a free market] using price controls and loose money will always produce disastrous affects."

Mr. Gaidar's comments were aimed at critics in the Russian parliament and current Prime Minister Viktor Chernomyrdin, who have been pushing a much more gradual approach to transforming Russia's economy.

The latest budget proposal by the government will increase support of the state bureaucracy at a time when it should still be cutting, he said. "This strategy will never fix the economy," he warned.

Even though inflation in Russia has slowed to under 10 percent a month -- a vast improvement from 1992 and 1993, according to the Russian government's statistical committee -- Mr. Gaidar says the government's spending programs will inevitably reignite inflation.

"You cannot [pay for the budget] by extracting more money from the economy by taxation. You will keep supplying more money, so inflation will come back," Mr. Gaidar said. Mr. Gaidar is head of Russia's Choice, the largest reform faction in the Russian parliament's lower house, the Duma.

The other major stumbling block to speeding the free market transition and attracting foreign investment is rampant corruption, he said.

In subsidized industries like in Russia, someone always has access to cheap products, which they can sell illegally, he said. That problem will remain until the morass of state regulations that constrain markets are cut, he said.

"The present government believes that the problem is the state is not big enough, that there should be more regulations and more employees," he said. "I believe that corruption is always connected to excessive regulation."

But despite all the problems, Mr. Gaidar noted, Russia is getting more and more attractive for U.S. investors.

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