Russia's Task: First Find a Cabinet, Then a Policy

Old-liners ready to crank out more rubles. Reformers and West see a road to disaster.

As Russia tries to court an International Monetary Fund (IMF) wary of giving it more money, the new government of Prime Minister Yevgeny Primakov is sending mixed signals about how it will avert economic collapse.

Mr. Primakov is trying to please all political forces by forming a center-left Cabinet with members from several camps. But the cost of winning the support of the opposition is ideological disunity - half of the Cabinet is contradicting the other on critical policies. The risk is that this mishmash could create conflict within the Cabinet just when stability is needed most.

"The signals are too contradictory right now to make any cohesive idea of what will be the core of the government's economic policy," says Boris Makarenko, deputy director of the Center for Political Technologies in Moscow. "Primakov is an experienced manager, but there exists a real danger of constant conflicts."

A major division is over whether to print more money - and if so, how much - to appease millions of workers who have gone unpaid for months. This solution, which would inevitably lead to hyperinflation, is favored by new Central Bank chief Viktor Gerashchenko and Deputy Prime Minister Yuri Maslyukov, who earned their spurs during the Soviet era of greater state control.

Moderate reformers - namely Alexander Shokhin, deputy prime minister for finance, and two other deputy prime ministers from the centrist Our Home Is Russia party - are uncomfortable about cranking up the printing presses. It would lead to higher prices, which already more than doubled over the past month, they say. At the same time, the ruble is dropping in value again, finishing yesterday at about 15 to the dollar.

Their reservations are shared by Western lenders, who have insisted that no more money will be disbursed to Russia until it gets serious about monetary reforms.

Primakov has been at pains to insist that anyone working for his government must leave ideology at the door. Despite the fact that his expertise is in diplomacy rather than finance, he has instilled a hope for stability among Westerners after a month of panic when the government defaulted on loans and banks went under.

But as long as Primakov's policies remain vague, he will find it hard to win international support. He has given few hints of his plans other than that social welfare and stimulating real growth are important.

The expected exit of tough tax chief Boris Fyodorov, a leading liberal reformer, would also be viewed with concern in the West.

"It will be easier and quicker to print money than collect it," says Valery Fedorov, deputy director of the Center for Current Russian Politics in Moscow.

The IMF, which sent a mission here this week for talks, insists Russia must deliver on reforms if it wants the next $4.3 billion installment of a promised $22.6 billion stabilization loan.

"If Russia, like Asia, can begin again to help itself, and to do so convincingly, then we can stand ready to help," IMF head Michel Camdessus said Sept. 15.

But Leonid Abalkin, a Soviet-era economist who is advising Primakov, says Russia should revise its relationship with the IMF. "The former government blindly and irresponsibly followed [IMF] advice. That was one of the most important reasons for the political, social, and economic crisis that has struck our country."

Finance Minister Shokhin says he doubts that the IMF will soften its demands for better tax collection and meeting budget targets.

But various analysts point out that the West is deeply concerned about the global impact of a Russian crisis, wanting to avoid turmoil in a country equipped with nuclear arms.

This is a card the Russian government will play: Give us more money or we will fall apart, says Yevgeny Vittenberg, a political scientist at the Independent Institute of Social and National Issues in Moscow.

You've read  of  free articles. Subscribe to continue.
QR Code to Russia's Task: First Find a Cabinet, Then a Policy
Read this article in
https://www.csmonitor.com/1998/0918/091898.intl.intl.3.html
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe