Yeltsin's poorly played hand

August 27, 1998|By Marshall I. Goldman

JUST WHEN it looked as if Russia was at the bottom of its economic and political rope, President Boris Yeltsin surprised us by resuscitating Viktor Chernomyrdin as prime minister -- thus proving that there is still a way to go.

A mere five months ago, Mr. Yeltsin took a gamble and appointed Sergei Kiriyenko as prime minister and fired the same Mr. Chernomyrdin, obviously dissatisfied with Mr. Chernomyrdin's performance. Mr. Yeltsin explained that he needed someone with fresh ideas and enthusiasm, someone who could revitalize the Russian economy.

At the time, Mr. Kiriyenko seemed an unlikely choice. He had been in Moscow barely a year, and his most senior position was that of minister of energy. Yet, the 35-year-old Mr. Kiriyenko seemed like a breath of fresh air.

He had opened his own bank and created his own oil company in the provincial city of Nizhni Novgorod. He clearly was a quick learner.

Admittedly, Mr. Kiriyenko lacked experience in dealing with Moscow's political establishment. But he quickly demonstrated his competence and moved to deal in particular with Russian economic problems that had basically been left unaddressed by Mr. Chernomyrdin.

Mr. Chernomyrdin simply had been unwilling to take the strong medicine that was needed.

Because the Russian financial markets had been vibrant in 1997, there did not seem much urgency until recently in addressing these matters. As the Indians might have said: "In a strong wind, even turkeys fly." In 1997, the tripling in value of Russian stocks was a strong wind. And the big turkey was Russia and its festering problems.

But with the Asian crisis, the wind shifted and the turkey crashed, leaving Mr. Kiriyenko to pick up the pieces. In the end, he was forced to declare a moratorium on the country's debt, devalue the ruble and, in effect, put Russia into bankruptcy.

This was the legacy left by Mr. Chernomyrdin, and there is no doubt that if Mr. Chernomyrdin had remained as prime minister, the result would have been no different.

With all this turmoil, Mr. Yeltsin began to feel the heat. Off on vacation and clearly not in full command of his body and mind, he began to look for scapegoats. Under Mr. Yeltsin, it is always someone else's fault.

The fact that on Friday the Duma voted overwhelmingly for Mr. Yeltsin to quit as president forced him to focus.

Nor did it help Mr. Kiriyenko that the Moscow oligarchs -- the very rich -- began to agitate for Mr. Kiriyenko's removal. As Mr. Kiriyenko began to press for effective tax enforcement and the breakup of some of the oligarchs' monopoly control, Mr. Kiriyenko became the enemy.

With a moratorium in effect on payment of the government's debt, some of the industrialists were on the verge of bankruptcy. As early as Friday, there were rumors that the oligarchs would prevail and Mr. Kiriyenko was on the way out.

So, to take the heat off, Mr. Yeltsin fired Mr. Kiriyenko, his latest scapegoat, and brought back the incompetent Mr. Chernomyrdin.

It is hard to see how Mr. Chernomyrdin will be more effective than he was before. Admittedly, he may be able to work out some compromises and coalitions.

But Russia may have run out of time. It has run out of money, and it has already exhausted its first installment of a loan from the International Monetary Fund.

Can a country go bankrupt? Russia under Mr. Chernomyrdin may soon provide an answer.

Marshall I. Goldman is associate director of the Davis Center for Russian Studies at Harvard University.

Pub Date: 8/27/98

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