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Tunnel is longer, but light still on

Russia is on its fourth premier after a year of upheaval. But the news isn't all bad.

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One year after the bottom dropped out of its economy and the ruble nearly evaporated, Russia is still mired in crisis but - surprise - doing far better than anyone predicted.

The dire fallout from the Russian government's sudden decision to default on its domestic debts on Aug. 17, 1998, triggering the collapse of the country's infant banking sector and 70 percent ruble devaluation, still dominates the lives of the majority of Russia's citizens.

The popular mood remains grim. "Due to the crisis, the light at the end of the tunnel has been switched off," runs a current joke.

But it may be that the tunnel only got a bit longer. Russians, though battered, have survived the crash, and a few industries are rebounding smartly.

If the country can get through the next year and elect a forward-looking new parliament and president, the outlook may even turn bright.

Many analysts say the worst thing about the crisis is not the economic hardship, but the ongoing turmoil and uncertainty caused by President Boris Yeltsin's repeated government shake-ups. He has fired three prime ministers since the crisis began. The fourth, Vladimir Putin, was confirmed yesterday by the Duma, the lower house of parliament.

"Nothing has done as much harm to Russia's ability to deal with its problems, and its reputation in the world, as the constant disruptions at the top," says Mikhail Dimitriev, an analyst with the Carnegie Endowment in Moscow.

"Ultimately, I think we must await a change of power in the Kremlin before we get a real strategy for reviving the Russian economy," he says.

Following Monday's confirmation vote, Mr. Putin pledged to stick with the previous government's economic policies and to strengthen social policies to aid the poor.

"We will continue reforms started by previous Cabinets," Putin said. "But the reforms aren't a goal by themselves, they must improve peoples condition."

It's not hard to see how Russians are still struggling with the crisis. Everyone has a story.

"I lost my savings, my job, my car, just about everything I'd gained in the previous five years," says teacher Katya Milyukina. Her bank, one of Russia's biggest, closed its doors after the crash, taking her $3,000 nest egg with it.


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