Yeltsin's Dead End?

Article excerpt

The West's new $22.6 billion rescue package may buy Boris Yeltsin's regime some time, but it may not save his "reforms" or perhaps even his presidency. It was clear to me during a three-week stay in Moscow in June and July that the country's deteriorating economic conditions are leading to increasingly confrontational social protests. Certainly the country seethes with resentment. Self-professed Russian "capitalism" treats its people in ways Karl Marx never imagined. Millions of workers and middle-class professionals haven't been paid their salaries for months, in some cases years. As strikes convulse key regions of the country, there is a strong undercurrent of fear, even panic, in government circles, and Yeltsin himself recently hinted darkly about the possibility of a coup.

Rarely has the distance between Western perceptions and Russian reality been so great. The insistence of the Yeltsin government and its Western patrons that Russia's crisis is merely financial and can be fixed by monetarist budget cuts and improved tax collection is myopic. The country is in the depths of the most severe economic depression of this century. Unlike Asia, whose crisis followed decades of unprecedented economic growth and massive infrastructural investments, Russia enters its crisis following a decade of infrastructural collapse, capital flight and the kind of mass poverty not seen since the forties. Industrial production, according to one estimate, has dropped since 1991 by 80 percent, capital investment by nearly 90 percent. The government's "anti-crisis program"--dictated by the IMF and other international lending institutions--will lead to painful consequences like those of the shock therapy policies that already ravaged most citizens in the early nineties. Furthermore, the IMF and other Western loans are saddling future generations with massive debt. Even the moderate and generally pro-Yeltsin speaker of the Parliament's upper house warns, "We have chosen debt slavery over development."

The desperate attempt by the Russian government and its Western sponsors to avoid devaluation of the ruble is as much about politics as economics. The Clinton Administration and international lending institutions undoubtedly fear being charged with "losing Russia" if the Yeltsin government collapses. The only two economic achievements the government still claims after nearly seven years and billions in Western aid are a stable ruble and low inflation. In fact, both are pseudo-gains: The ruble has been artificially kept within a currency corridor of roughly six to a dollar--well in excess of its actual value--and inflation has been controlled in no small measure by the government's policies of depriving citizens of their salaries and not paying its bills. Ironically, one consequence of the West's vaunted monetarist policy has been to demonetarize the economy: Barter now accounts for nearly half of all economic transactions. As one Moscow economist told me, "Money is unknown north of the Urals."

Since May, angry and increasingly radicalized miners and railway workers have used tactics rarely seen since the Revolution--hostage-taking and the blocking of railroad tracks--paralyzing major regions of the country. No less important, the nature of strikes is changing from demands for back wages to political demands that Yeltsin resign or be removed. Middle-class professionals--doctors, teachers, defense workers--are joining the strikes, a strong sign of the widespread distrust of the Yeltsin government.

"People are fed up," says Boris Kagarlitsky, a leading activist and intellectual who works with independent miners' unions. "But for now, the strikes sweeping the country are strong enough to challenge the government, not to overthrow it." Even so, this summer's strikes are better organized, more militant and more strategic, as illustrated by the synchronized shutting down of railway lines in the Far East and Siberia. …