Yeltsin's Aides Form Opposing Camps
By David Hoffman
Washington Post Foreign Service
Sunday, June 23 1996; Page A24
MOSCOW, June 22 -- At the President Hotel, not far from the Kremlin, President Boris Yeltsin's reelection campaign headquarters has two nerve centers.
One of them is on the ninth floor and is run by a group that thinks that if Yeltsin wins, there will be another chance for far-reaching democratic and free-market changes. The other is on the eighth floor, run by conservatives whose vision of a second term is a more powerful state apparatus and more subsidies for Russia's industrial dinosaurs.
They are different, yet both work for Yeltsin, and they underscore a major void in Yeltsin's campaign. Despite weeks of intensive campaigning, which have salvaged his chances of reelection, Yeltsin has said almost nothing about the direction he would take the country in a second term.
This vacuum is one reason why the stakes were so high in this week's Kremlin shake-up, in which Yeltsin abruptly fired his defense minister, secret police chief, head of his bodyguards and a deputy prime minister. All four were part of a powerful, secretive anti-reform cabal that had successfully edged Yeltsin away from free market, democratic changes in recent years.
Not only did the reshuffle feature dramatic allegations that the hard-liners wanted to subvert the elections. It also offered a glimpse of what reformist Anatoly Chubais called "a long and arduous struggle" between the competing camps.
The campaign isn't over. Yeltsin received only 2.4 million more votes than his Communist Party rival, Gennady Zyuganov, in the first round. In the July 3 runoff against Zyuganov, Yeltsin faces many problems that could erode his vote, including mid-summer apathy. However, Yeltsin may have gained strength by adding to his team the popular third-place finisher, Lt. Gen. Alexander Lebed, who received 10.9 million votes.
Whoever wins the presidency, a host of potentially explosive economic and social problems awaits him. These include a collapse of tax revenues, a latent banking crisis, a depression in industry and simmering social tensions over unpaid wages and pensions. Two other critical areas of decay -- the army and agriculture -- are ticking time bombs.
"Yeltsin needs to announce what he is going to do, so on the next day after the election we won't get something we didn't expect from him at all," said economist Grigory Yavlinsky, who placed fourth in the presidential voting last week.
One of the reformists working for Yeltsin agreed: "There is going to be a day of reckoning soon after the election."
But instead of addressing these problems, Yeltsin, 65, whose rise to power was largely based on tearing down communism, has devoted his reelection drive to stoking fears that communism could return. He has mixed a vigorous personal campaign style with seemingly unlimited government largess and blanket coverage from a sympathetic news media.
Yeltsin has insisted that he will continue with "reform," but avoided defining it, except in the broadest sense of being the opposite of communism. His notion of reform appears to run the gamut from radical change, like that which followed the Soviet Union's collapse, to the more recent jockeying among powerful financial clans for a bigger slice of government property and wealth.
"I think the main era of reform will come right after the election," said Gary Kasparov, the world chess champion who is close to former prime minister Yegor Gaidar and has been working to support Yeltsin's campaign. "Yeltsin tends to be very mobile at these moments. People have voiced their protest at turning back to the past."
"The policy won't change much from what we've seen the last two years. Yeltsin will probably sleep more and play more tennis," said Leonid Radzikhovsky, a journalist and political adviser to Lebed. "Yeltsin always has the potential to wake up when he's threatened. If there's a threat, he always rises to the occasion. But if there is no threat, his team will rule the country as it has for the last few years."
This means, he added, more of the elite nomenklatura capitalism, with the government "controlling all financial flows and the country living off gas, oil and metal exports. It's not a very promising future, but it's no worse than we had before."
"Yeltsin, like any sane person, would like to be known in history as a progressive leader who left a prosperous, free country," said Radzikhovsky. "But Yeltsin doesn't live in a history textbook. He lives in a real world. If he implements dramatic new reforms, who will support him? Bureaucrats don't need these reforms. Bankers who are making millions don't need them. Communists don't want them. He'll reserve these words on reform for the television broadcasts."
On May 31, Yeltsin's campaign published a lengthy program, but it was filled with vague platitudes. Many of the goals were obviously unattainable, such as "complete suppression of inflation," while other important but divisive topics, such as privatization, got no more than a passing mention.
Last week, Chubais seemed triumphant. He announced the latest dismissals with a flourish, saying that he was "profoundly convinced" the presidential election would deliver "a new Yeltsin, with a new team, a renovated team."
But, as Chubais has learned from recent experience, Yeltsin prefers to surround himself with competing power centers and rival interests. Not that long ago, Chubais was ejected from the government. On that day in January, Yeltsin showed no mercy for the architect of his privatization program. "So many mistakes were made" by Chubais, Yeltsin said then. "He sold off our major enterprises for a song."
Nonetheless, the reformists are laying big plans for a post-election comeback. According to a well-informed source, a major new economic plan with far-reaching implications is already under preparation. It would pursue hemorrhaging tax revenues -- by government estimates, 40 percent of taxes expected this year have not been collected -- while bolting the door against demands for new subsidies to ailing industries.
However, Yeltsin may not be able to ignore the growing demands that the government repair the torn social safety net, especially the problem of unpaid wages and pensions that has proven so potent for the Communists. Yeltsin vowed to make good on these obligations during the campaign and blew a huge hole in the budget doing so. But the problem remains unsolved. The Russian government says it is $5.6 billion behind in wages, and in the week ending June 10 about 95,800 factories and agencies could not meet their payrolls on time.
Alexander Bekker, an analyst with the daily newspaper Sevodnya, said Yeltsin believes he cannot ignore these demands: "He thinks he has to reckon with prevailing social interests. There exists a certain sector of the economy that cannot immediately follow the path of the reforms. These reactionary industrial plants still want to receive state subsidies. For them, it is the only way of profitable existence."
"But there is no money in the treasury, so Yeltsin will be forced to cut social privileges and payments," Bekker said. "He will have to sharpen the tax collection. This will be a very difficult period."
"If the country again slips into crisis, Yeltsin may have to introduce serious reforms," said Radzikhovsky. "But if not, there may be a long period of stagnation. . . . The bureaucrats, bankers and democrats are happy. And the Russian people, they are always unhappy. So Yeltsin will say, `Let them be unhappy as always. I'll go and play tennis.'"
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