West Should Stay out of Russia's Debate on Economic Reform

Article excerpt

The drama of Russian reform was given a roadshow performance at the 1994 World Economic Forum just concluded at this resort town. Western-trained, market-oriented Russian reformers made their case against the more conservative Russian economists who now have taken control of policy in Moscow.

Russia's new prime minister, Viktor Chernomyrdin, traveled to Davos to answer them and to respond to the criticisms of former Western advisers to the Yeltsin government.p The argument was more nuanced and the outcome less transparent than some accounts have made out.

The reformers accuse their rivals of having carried out an "economic coup d'etat" and say that the new government's programs will bring about hyperinflation in Russia by mid-summer. Prime Minister Chernomyrdin denies this, saying Russia must be stabilized but must also continue economic reforms. He said the country cannot turn back, but it also cannot slavishly copy a Western model that rests on assumptions irrelevant to Russian conditions.

"We will look after ourselves," he said. He also warned, ominously, "Don't look down on Russia."

Chernomyrdin's speech on Sunday was understandably defensive. The Western press interpretation of the Russian reform struggle, and the reactions of the business and political leadership gathered in Davos, all but unanimously have held the Chernomyrdin approach wrong, if not perverse, and the young reform leaders - Yegor Gaidar, considered the architect of the previous reform policy, and Boris Fyodorov, former finance minister - clearly right.

Another young Russian, a new entrepreneur, remarked to me that neither Gaidar nor Fyodorov had ever before run anything beyond an academic or banking seminar. The policies they have tried to apply in recent months are those of the Western academic consensus and reflect what Western business people believe. They rest on the conviction that radical privatization of state enterprises, a total opening to market forces and tight monetary controls are the only way for Russia to construct an economy that works and will be able to compete internationally. …