Boris's Bet: Russian Roulette?

Russians call their current leadership a "kamikaze government," and last week Boris Yeltsin showed why. It wasn't the new economic proposals he made to the republic's Congress of People's Deputies: promises to sell off state enterprises, close unprofitable factories and set up realistic banking and taxation systems. Russians have heard all that before. But his plan to liberate state-controlled prices carried a frighteningly tight deadline: the end of this year. And then there was Yeltsin's candidate for the post of prime minister of the republic, a man who will surely be blamed for the inevitable pain of economic shock therapy. Calling it "the most important decision of my life," Yeltsin named himself fall guy. The move was classic Boris bravado. "We've got 'our Yeltsin' back," said former prime minister Ivan Silayev.

It will take all of Yeltsin's grip on the public imagination to see him through this political gamble. Russian economists expect prices to leap several hundred percent in the wake of liberalization. Closing thousands of state enterprises will throw millions of Russians out of work. In his speech, Yeltsin promised things would get better by the autumn of 1992, but what about the meantime? "Yeltsin has taken an extremely dangerous step," said presidential press secretary Pavel Voshchanov. "He's put the public's trust in him on the line."

So far the Russian legislature is playing along. The deputies approved Yeltsin's reform plan in principle and gave him the right to ignore any existing legislation that might get in his way. But they voted for the Yeltsin plan with a certain trepidation. "The period of predictable economic collapse is over," legislator Valentin Fyodorov told the Congress. "Now begins the period of unpredictable collapse."

The proposals drew flak from economists, too. Several pointed to the continuing influence of decades of central planning. Most goods are still produced noncompetitively, by single factories in each industry; to free prices without breaking the monopolies is an invitation to price gouging. At the same time the central Soviet government fuels in ion by printing money around the clock. The Russian Republic might start issuing its own currency, but that would not stop the flow of rubles from the central government. Yeltsin conceded later in the week that even under his reforms, some prices would be held artificially low, including basic consumer goods such as bread, milk, sugar and vodka. He also backed down on the promise to charge world prices for Russian oil, gas and coal--a threat that panicked other republics dependent on cheap Russian energy.

Yeltsin downplayed the impact beyond Russia's borders. His aide Gennady Burbulis claimed that the republics were reacting with "complete delight, because ... Russia is placing on its [own] shoulders the most dangerous burden." But while officials in the newly independent Baltic States endorsed the Yeltsin program, the poorer republics of Central Asia, for example, have a lot to lose. One official in Tadzhikistan told Izvestia that "the price rise is fraught with unpredictable social consequences," and the president of Uzbekistan said his republic would have to take "protective measures" to insulate itself against inflation in Russia. Others noted that the Russian president had not even bothered to confer in advance with any leaders in other republics. Later in the week he also threatened to take over the gold, diamonds and hard-currency reserves held by the union government--then withdrew his inflammatory statement. Yeltsin also announced that Russia would cease financing dozens of union-level ministries beginning Nov. 1, a move that will virtually wipe out the central government. Giant Russia was the clear beneficiary of such a move.

Yeltsin's economic plans may also founder on the separatist movements that are now fracturing Russia. Zealots in southern Russia, along the Caucasus Mountains, say they're ready to declare war against Yeltsin. The Muslim territory of Tatarstan, only a few hundred miles east of Moscow and a key industrial center, has been demanding full independence from Yeltsin for more than a year now. And not all the splits are ethnic. Local potentates in Siberia have also started agitating for much greater autonomy from Moscow, if not actual statehood. "Siberia is rich, and it could do better on its own," legislator Vladimir Bovarin told NEWSWEEK at the congress last week. "If Siberia wanted to secede, there really isn't anything Yeltsin could do about it."

The real challenge is closer to home. One official of the Russian government last week admitted that economic recovery could take much longer than one year in certain key areas of the country: Moscow, which is used to a higher level of consumption; centers of defense-industry production, including many of Russia's bigger cities, and the coal-producing regions. For Yeltsin, who rode to power partly on his ability to soothe striking miners, the support of Russian workers is critical. Recent demonstrators in Moscow bore a placard saying, MARKET PRICES, MARKET WAGES. Yeltsin responded by calling on the workers for a little "market productivity." The next time he spars with them, it may be over more than words.