Yeltsin Moves To Regulate Reform DriveBy Daniel Williams
Washington Post Foreign Service
Thursday, September 25 1997; Page A27
It is an axiom of history that revolutionaries have a hard time governing effectively. A brash style that sweeps away an old, discredited system is frequently inappropriate to establishing a new one.
Enter Boris Yeltsin, arguably one of the late 20th century's major rebels, who today outlined his latest plan to wrench the virtually anarchic Russian state he helped create five years ago into a prosperous, well-regulated, modern democracy.
Yeltsin, in a keynote speech to the Russian legislature's upper house, declared final victory over the past. It is time to move on, he said. "A return to the past is no longer possible; it is clear that a free economy has firmly established itself in Russia," he told the opening session of the Federation Council. "The question is . . . what state and what society will the free economy promote. This is one of the most difficult questions."
Reform must now take second place to performance, Yeltsin asserted. "I would like to remind all structures of government once again that broad reform should not overshadow ordinary day-to-day concerns, such as bringing in the harvest, paying wages and pensions on time, preparing for winter and so on," he said. "In the final analysis, political and social stability in the country depends on the solution of . . . day-to-day problems."
Yeltsin also suggested that the era of laissez-faire capitalism, having thoroughly supplanted Communist-style central planning, is at an end. "From the policy of nonintervention, we are resolutely going over to a policy of preemptive regulation of economic processes, control over vitally important sectors and efficient spending of budget money," he said.
Verbally, at least, this is a new Yeltsin. In his first months and years in office, he established and solidified an electoral democracy, lifted price controls, sold off state enterprises, forced businesses to sink or swim on their own, invited regional leaders "to grab" as much sovereignty as they wanted and permitted Russia's vast military-industrial complex to wither.
At the same time, his government lost control of tax collection, was unable to pay wages on time, allowed corruption to flourish and largely turned its back on social welfare. All this took place in the name of atomizing the Soviet Communist system.
Now, it appears that Yeltsin is set on imposing order on the forces he unleashed. It will not be easy. Big business and banks resist paying taxes and fair market prices for remaining government-owned resources; corruption appears to be entrenched at all levels of officialdom; regional governments ignore orders from Moscow; the army is in tatters.
Despite rosy government predictions, the economy remains stagnant. A deteriorating public health system has contracted male life-expectancy levels; birthrates have shrunk as couples resist bringing children into a world of hardship. Nationalist and Communist opposition groups are threatening strikes and street demonstrations.
In his speech, Yeltsin focused on four issues: the economy, official corruption, Kremlin control over regional governments and delivery of government services. He offered few specifics on the future role of government in business, except to say that while the state will perform a regulatory function, there will be no return to central planning. "In itself, the market is not a cure-all," he said. "In any civilized state, the market mechanism and state regulation work in harmony."
Over the past few months, Yeltsin's government has signaled a shift away from tactics designed to crush the old order under a policy of economic stabilization. Yeltsin's chief economics adviser, First Deputy Prime Minister Anatoly Chubais, has pledged to sell the remainder of state-owned oil fields, industries and other businesses to the highest bidders, rather than at rigged, cut-rate auctions designed to speed privatization and enrich Kremlin insiders.
Chubais also has announced plans to end the cozy arrangements between the government and large, politically connected banks that have proven enormously profitable to a small circle of financiers. In addition, the government finally has moved forcefully to collect a portion of long-overdue back taxes from large monopolies -- including the natural gas giant Gazprom.
At the same time, Yeltsin took a stab at combating corruption by ordering government officials to declare their net worth and sources of income. By most accounts, those who complied wildly undervalued their holdings, while many officials simply ignored the call. Yeltsin also announced a long-term plan to slash military manpower levels while modernizing the country's ragtag armed forces. Moreover, his government paid off back wages and pensions to thousands of state employees and retirees, although it is uncertain if such payments can be maintained.
But Yeltsin and his young Kremlin allies have been subjected to criticism even from some former supporters. Bankers complain that the Yeltsin they supported in elections a year ago has betrayed them; opposition politicians and some prominent retired army officers oppose part of his plan to reorganize the military.
Since recovering from major heart surgery last winter, Yeltsin often has looked like the energetic leader of old. Unlike last year, when he disappeared from public view for weeks at a time, he is constantly on television, travels the country frequently and takes a hand in settling squabbles among his underlings. Last week, he met with leading bankers to demand that they stop criticizing Chubais and his privatization methods.
Russian editorial writers have begun characterizing him as a new czar -- a paramount leader who stands above the political fray but is indispensable to decision-making. Referring to his dealings with the bankers, a television commentator remarked: "The president has appeared again in his new role -- the Master of our Russian land, who alone is capable of putting it in order, disregarding [the legislature], political rivalries and various fights."
His central role makes some Russians uneasy; a weak legislature and judiciary are recipes for dictatorship, they fear. Even former Soviet leader Mikhail Gorbachev, Yeltsin's old rival and himself an authoritarian figure, has offered a warning against one-person rule.
"Maybe authoritarian rule is needed at turning points in history, but . . . our president is sliding toward czarism," Gorbachev declared.