The wild, wild east Russia: Yeltsin pledges to try to bring order to an unrestrained private market.

October 05, 1997

LIKE HIS Soviet-era predecessors, Russian President Boris N. Yeltsin loves to make speeches. The longer, the better. The belief around the Kremlin seems to be that if something is announced in public, implementation follows. Which, of course, disregards the Russian bureauracy's famous proclivity for inertia and inaction.

In his latest major declaration, Mr. Yeltsin designated 1998 as a "breakthrough" year in economic growth and vowed to limit the role of Russia's superrich, who are running the economy in their own interests.

"The government is laying down clear and equal rules of economic behavior. We will ensure that these rules are followed by everyone without quibble," he said, stressing there would be no return Soviet-era central planning.

It sounds good. But Mr. Yeltsin hit some of the same themes in April. He pledged to end corruption and clean his government: "Corruption is one of the main reasons that the authority of the Russian state is so low today."

Yet little has changed. Many well-placed government officials still take bribes without fear of punishment. Particularly scandalous is the government's seeming inability to collect taxes from the business elite, who squirrel their gains in foreign bank accounts.

What galls ordinary Russians are the shady deals in which those "businessmen," protected by organized crime muscle, have taken over state-owned companies for a pittance in privately negotiated deals. Those transactions have seldom resulted in resumption of production. Instead, the new owners sell off the assets or use the companies for tax scams.

This has contributed to the disastrous state of Russia's economy: one-half of all privatized, formerly state-owned enterprises are losing money and at least one-fourth should be declared bankrupt, according to the International Monetary Fund.

The narrow ownership concentration of privatized Russian firms is alarming. Since those companies have patrons at the highest levels of government, it will take more than promises to change the situation.

Pub Date: 10/05/97

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