YELTSIN’S DECISION TO BACK HIS OFFICE HOLDERS IS LIKELY TO PROVOKE A POLITICAL CRISIS

Yeltsin’s decision to back his office holders is likely to provoke a political crisis

Larisa Piyasheva

Moscow

The Yeltsin reforms which took place under social democraticor at times liberal banners, have called forth a sharp reactiontoward national patriotism and are the foundation of the left-centristand right-centrist electoral blocs, both of which are opposedto liberalism. Not fascism or national patriotism but rather liberalismhas become the main object for defining their positions. A largenumber of "realists" have appeared for whom the liberalchoice mean a path of radicalism and extremism leading not "totransformations but to destruction." "In practice,the bright ideas proclaimed by the radical reformers broughtwith them blood and poverty and humiliation and force" saystheir Manifesto. ("No to Radicalism, Yes to Cooperation," December 23, 1994) It continues "the time limit for thecarrying out of radical economic experiments is over. We muststop the fatal process of the degradation of Russia. We see anew Russia .. with a rich and enlighted, strong and self- confidentstate. We need a fundamental increase in the role of the statein the most important sections of the reformation and modernizationof the economy."

A new ideology is being formed. At its foundations lies theold idea of a strong state which can defend all the achievementsof the 1991-95 period from "revolutionary" redivision,from below at the hands of those impoverished by reforms, andfrom above as a result of the coming to power of the opposition. All of those who are dissatisfied with, or opposed to, the stateare called extremists. The "realists" want to formtheir ruling class out of the new rich and the remaining nomenklatura.

The leader of the "realists" is the president of theState Investment Corporation, Yuri Petrov, a former chief of BorisYeltsin’s administration. Prime Minister Chernomyrdin, and thechairman of the Duma Ivan Rybkin stand at the head of the electoralblocs. The new rich from financial circles offer their supportfor stability, providing credits to the federal budget in exchangefor the right to become trustees for government control of semi-privatizedindustries. The sums involved are gigantic. For the oil companiesalone, the tab is 26.6 trillion rubles. The bankrupt state willnver return these sums even after five or ten years, but the statepresident will spend them on his election campaign.

The "Realists" already have sent to the Kremlin a documententitled "On the role of the state in the realization ofeconomic reform." It aserts in all seriousness that in theearly Yeltsin period, this role was clearly insufficient and thatthe Gaidar government liberated Russia from the presence of thestate and left everyone to their fate in a liberal anarchy. Theauthors have already forgotten how they went to the governmentfor credits, loans, tax benefits and how feverishly the printingpresses at the mint worked, how state structures grew and thenumber of state committees expanded.

Yeltsin’s selection of such allies means that Russia does notintend to return to the past, to state planning, but neither doesit intend to move forward to a democratic social order with acompetitive economy. For some time, it will remain a country witha limited democracy, with a semi-state, semi-privatized economy. It will be anarchic, corrupt, and oligarchic. The nomenklaturaaristocrats who have received, in the process of exchanging powerfor property, both power and property, will devote all their effortsto preserve what they have achieved, thus using their economicpower for selfish ends.

Opposed to this "realism" of the Yeltsin backers aretwo camps, the left communists and national patriotic groups,on the one hand, and the liberal-democratic groups, on the other. Zyuganov, Zhirinovsky, Ampilov and others oppose Yavlinsky, Gaidarand a narrow group of liberals still incapable of unifying themselves. The real struggle for the minds, souls, and votes of the electorswill develop between these two forces. The votes of the Yeltsinbloc will be obtained not on an ideological basis: the Yeltsinfaction has already lost the liberal democratic voter and notyet won the national patriotic one.

Yeltsin’s decision to rely on the power of officials to keepthemselves in office is likely to provoke a crisis even if hispeople stay in power. His backing of statist and sometime communists–Chernomyrdin,Petrov, and Rybkin who are betting on a strong state and playingwith patriotic slogans but who in fact believe in nothing buttheir own selfish interests–will pave the way for the comingto power of the "true" national patriots with all theconsequences that will flow from that. Friedrich Hayek said thatthe effort to find a third way, neither capitalist nor socialist, leads "to totalitarianism and to fascism." It is,he argued, "the road to slavery." In Russia today,yet again there is a real chance to test this liberal maxim inpractice – by repeating the path which Germany tread from 1933to 1945.

Larisa Piyasheva is a consultant to Russia’s Council of theFederation (the upper chamber of the parliament) on economic issues.