THE FORTNIGHT IN REVIEW

The Fortnight in Review

The past fortnight witnessed Russia’s triumphant reformist government celebrate its first "100 days" in office. President Boris Yeltsin, meanwhile, traveled to the G-7 summit in Denver in an attempt to integrate Russia further into the developed world’s economy and to win international recognition for what Moscow sees as its considerable post-Soviet economic achievements. Concurrently, however, Russia continued to formalize its Union with Belarus, a development that many in Moscow and Minsk trumpet as the first step toward the reconstitution of the USSR and one that in many ways harks back to the attitudes of the Soviet period.

Russia’s New Government Marks First Hundred Days

The practice of assessing new governments after "the first 100 days" in office, a recent one in Russia, seems doubly strange on this occasion since some of Russia’s new team had been in government before, while Prime Minister Viktor Chernomyrdin has occupied that post since 1993. It is nonetheless clear that the mid-March appointment of Deputy Premiers Anatoly Chubais, Boris Nemtsov, Oleg Sysuev, Alfred Kokh, and Yakov Urinson marked a turning point. This is true not only because the new team declared its determination to build on and complete the reforms begun by Yegor Gaidar’s 1992 government, but also because President Yeltsin made it clear that the team has his strong support. Yeltsin’s return to health after almost a year of sickness was one key factor in the government’s stabilization, as was the confidence Yeltsin continued to display in Chubais. In the past, Yeltsin ran his cabinet on a divide and rule basis, strengthening his personal power but undermining the ability of successive governments to make coherent decisions.

Fighting Fires…

For all of that, the government’s activity is still largely restricted to what Izvestia‘s Otto Latsis, a strong supporter, calls "fire-fighting." The most urgent problem facing the government is the huge shortfall in tax revenue. Chubais warned in the bluntest terms that failure to collect taxes threatens the government’s ability to govern and that Russia could afford only a fraction of its current welfare obligations, under which two-thirds of the population receive some form of social benefit. Parliament reluctantly approved a new tax code, but doggedly refused to sanction the government’s austerity budget. After the Duma broke for its 45-day summer recess, Chubais vowed that the government would press ahead with its plans to slash public spending without parliament’s assent.

The new tax code is the government’s most significant achievement to date. It not only promises a significantly simpler and more effective tax system, but will enable the government to draft a realistic budget for 1998. However, the draft was hastily prepared and experts say it leaves considerable room for amendment. Moreover, the Duma reserved the right to review it in the fall. Observers warn, therefore, that the Duma may yet try to introduce changes that will undermine the code’s effectiveness. Getting the code adopted, moreover, is only a first step: persuading Russian firms and citizens, unused to fiscal discipline, to pay their taxes will be another gargantuan task.

In other areas of public policy, the first 100 days has allowed the new team only to map out the contours of future plans. The government has made it clear that it intends to assert control over Russia’s energy and transport monopolies, to introduce competition into the awarding of state contracts, particularly as regards defense procurement, to bring Russia’s wayward regional leaders to heel, and to end the privileged access to state funds currently enjoyed by insider banks. It has also promised to pay off wage arrears and prioritized the payment of back pensions while initiating a far-reaching reform of housing and utilities. That program will move Russia away from the Soviet system of handouts for all to one that targets welfare only to the most needy.

…And Surviving the Heat

But if the government has had some success in battling the "big fires," a number of smaller ones continue to smolder. The Communists in the Duma are sure that the government’s belt-tightening measures will fail, and they are anticipating a "hot autumn" that will sweep the hated reformers from power. There are some signs, however, that public confidence is beginning to revive. Yeltsin’s opinion rating, which plummeted during his long illness, is creeping up again. Nemtsov continues to enjoy high ratings and even Chubais, whose popularity is usually reckoned a negative quantity, has begun to evoke a certain grudging respect.

Yeltsin, moreover, received a hero’s welcome at the June 20-22 G-7 summit in Denver, even though cautious western politicians refused to upgrade the organization to a "G-8" or to set a firm date for coveted Russian membership the World Trade Organization. Russia’s third eurobond issue — $2 billion with a maturity of 10 years — was a signal triumph. Following Russia’s late 1996 $1 billion debut issue (with a 5-year maturity) and its DM 2 billion issue in March (7 years), this was Russia’s largest Eurobond issue yet and indicated that international confidence in Russia is strong. No one doubts the enormity of the task that lies ahead, but hopes are high that the new team will prove able to continue along the path it has mapped out.

Russian Foreign Policy: A Rocky Mountain High?

Russian diplomacy over the past fortnight was geared primarily toward President Boris Yeltsin’s high-profile appearance at the G-7 summit in Denver. The event, in which Yeltsin’s participation for the first time nearly matched that of the leaders of the group’s seven regular members, may have brought some intangible benefits to Yeltsin in his political battles at home, and to Moscow in its efforts to reestablish itself as one of the world’s leading powers. But, despite hopes that Russia might take home some sort of significant payoff for its acquiescence to NATO enlargement, the summit brought little in the way of concrete economic gains for Moscow. Most notably, there was little progress in Russia’s efforts to win entry into the World Trade Organization.

The summit did produce a Russian-American agreement that paved the way for the possible leveling of new UN sanctions against Iraq. But the compromise accord was seen by some as a diplomatic victory for Washington and as a setback for Moscow’s efforts to free Iraq from international sanctions. It was also unclear whether the summit advanced still strained relations between Russia and Japan. Yeltsin made a surprise announcement in Denver that Russia would no longer target its nuclear missiles on Japan, but the remark appeared to confuse the Japanese delegation as much as reassure it. Some delegation members apparently did not know that the Russian missiles had been aimed at Japan.

Indeed, the progress of bilateral Russian-Japanese relations constituted one of the most interesting sidebars to the main talks at the Denver summit. Japanese prime minister Ryutaro Hashimoto’s intention to raise the issue of the Kuril Islands — the territorial dispute that has long stymied improved relations between the two countries — was the object of much speculation in the days leading up to the summit. What Japan views as Moscow’s intransigence on the issue lays behind Tokyo’s very grudging acceptance of Yeltsin’s enhanced role at the Denver summit, and, despite official comments to the contrary, it was clear after the summit that the islands will remain a major irritant for the two countries. That the issue continues to smolder was made clear on June 26 when, less than a week after the summit’s conclusion, Japan protested officially to Russia’s embassy in Tokyo over an incident in which Russian coast guard troops fired on a Japanese boat fishing near one of the disputed islands.

Balancing East and West

As it has done on a number of occasions in the past, Moscow paralleled a major diplomatic event in the West — the G-7 summit — with one in the East — in this case high-powered trade talks in China headed by First Deputy Prime Minister Boris Nemtsov and Prime Minister Viktor Chernomyrdin. This diplomatic balancing act seeks to demonstrate both to the Kremlin’s domestic audience and to leaders in Western capitals that Russian policy is not oriented exclusively toward the West, but looks also to build friendly relations with states in Asia and the Middle East, some of which are former Soviet client states. Indeed, the construction of a "strategic partnership" with China is viewed in Moscow as perhaps Russia’s most effective counter-measure to NATO’s impending enlargement and to the general vulnerability that many Russians feel when confronting the triumphant post-Cold War West.

Belarus Between Dialogue and Polarization

Even as the European Union set a precedent by initiating a political dialogue between the administration of Belarusan president Alyaksandr Lukashenka and the opposition, Lukashenka’s actions exacerbated the already sharp political polarization between the country’s Moscow-oriented leftist regime on the one hand and pro-independence forces on the other.

Looking Back to the USSR

Crowning last month’s proclamation of the Russia-Belarus Union, Belarusan president Alyaksandr Lukashenka and Russian foreign minister Yevgeny Primakov on June 11 exchanged the instruments of ratification in Minsk and, one day later, the Russia-Belarus Union’s Parliamentary Assembly held its inaugural session in Brest, Belarus. Calling the union the first real step toward reconstituting the USSR, Lukashenka described Primakov’s role as that of "an engine in the movement toward that goal." The Russian foreign minister for his part declared that Moscow "will not shrink from paying the price" of union with Belarus — a remark clearly aimed at Russian economic reformers who oppose subsidizing the unreformed Belarusan economy. Primakov portrayed the Russia-Belarus Union as holding the promise of "democratization of society" and as intended to "reverse a [European] tendency toward separation of states." Such claims form part of Russian diplomacy’s attempts to obtain international acceptance of this union and, more generally, of CIS "integration" around Russia.

The Parliamentary Assembly chose Brest as the inaugural venue because of the city’s proximity to Belovezhskaya Pushcha, where the documents that formally dissolved the USSR were signed in December 1991. The Assembly’s members proceeded collectively to that "accursed place," as Russian Duma chairman and delegation chief Gennady Seleznev termed it, where Seleznev used the same hall for signing the Assembly’s resolutions envisioning the reintegration of former Soviet republics. On his proposal, the Assembly adopted the tune of the USSR anthem for the Russia-Belarus Union’s anthem. It commissioned new lyrics to reflect the new union, but with the proviso that they must mention neither Russia nor Belarus specifically, because the union is open to other former Soviet republics. The Russian delegates outdid their Belarusan counterparts in dreaming aloud about Ukraine, Armenia, and Kazakstan joining the Union. Yet Seleznev admitted that the Assembly’s role would in the foreseeable future remain confined to recommendations on harmonizing national legislation; and that proposals aired in Brest to elect deputies to the Parliamentary Assembly by direct vote face serious constitutional and political obstacles.

In Moscow, President Boris Yeltsin lost no time in rejecting the proposed anthem as a Communist symbol. In the practical realm, however, the Russian government continues to be a steadfast defender of the dictator Lukashenka against censure in international organizations after having helped him prevail at least temporarily in the political struggle in Belarus. Ironically, Russian Communist leader Gennady Zyuganov adopted a far more nuanced position at a Council of Europe hearing this week. Zyuganov conceded that Belarus’ observer status at CE can not be reinstated at this time, agreed that "it is necessary to help Belarus revise its legislation in accordance with European standards," and remarked that the Party of Communists of Belarus is in opposition to Lukashenka. That party, like Zyuganov’s, favors a parliamentary system of government and has joined the opposition to Lukashenka on that basis. On the other hand, both the Russian and Belarusan Communists favor a merger of the two countries. As a net result, Zyuganov is somewhat more willing than the Kremlin to distance himself from Lukashenka’s authoritarian ways.

Selling Out for a Price

Lukashenka, for his part, is impatient for an economic union with Russia before moving to a political union, and he understands the economic union simply as another name for Russian economic assistance to Belarus. He cast a shadow on the Minsk and Brest meetings through a series of angry statements, including prosecutorial speeches to the Parliamentary Assembly and to his parliament, on economic relations with Russia. Lukashenka accused top Russian officials, including Prime Minister Viktor Chernomyrdin and First Deputy Prime Ministers Anatoly Chubais and Boris Nemtsov, of sabotaging the Russia-Belarus Union in its economic aspects.

The Belarusan president, moreover, ticked off his immediate economic demands: release of a Russian state credit of 500 billion rubles, promised to Belarus but apparently held up; release of another credit of 800 billion rubles to Belarus, part of a 2.5 trillion ruble package earmarked by Moscow for all CIS countries; recalculation of Russian excise duties imposed on goods imported from Belarus; privileged access to the Russian market for Belarusan machinery and other products; higher Russian supplies of oil and gas at discount prices, and delivery of Russian raw diamonds for processing in Belarus. Lukashenka warned that he would personally confront Russian leaders with these demands, and he made good on his word. He flew to Sochi for a contentious meeting with Chernomyrdin, who consented to the release of the 500 billion credit, earmarked mostly for joint production of motor vehicles and agricultural machinery at plants in Belarus. An additional 500 billion is envisaged for the second half of 1997 if the first credit is used successfully. Although a mere handout in relation to Lukashenka’s extravagant demands, the credits enabled him to claim a political triumph back home.

Lukashenka Amasses More Power

Unanimously and without debate, the Belarusan parliament’s upper house on June 24 approved legislation enlarging the president’s authority. The additional powers will enable Lukashenka to appoint directly the Prime Minister, the Deputy Prime Ministers, the General Prosecutor, and the National Bank chairman and board; to dissolve both chambers of parliament; and to call referenda and regular or "extraordinary" parliamentary elections, all by presidential decree.

The additional powers took the form of changes to the law "On the Presidency," which had been enacted in 1995 by the legitimate parliament. Lukashenka never signed that law because it fell short of granting him the powers he was seeking, and the disagreement helped trigger the constitutional confrontation which led to the disbanding of that parliament by Lukashenka. The June 24 vote took place in the absence of Lukashenka, who was busy planting a Russia-Belarus friendship tree in Sochi. The unanimous vote suggested that the president’s political machinery functions smoothly even in his absence. The grab for additional powers also indicates that Lukashenka does not take seriously the dialogue initiated by the European Union between the presidency and the legitimate parliament’s leadership.

European Union Mediates Tense Dialogue

The leaders of the forcibly dissolved parliament entered into the EU-mediated dialogue with Lukashenka confident of their solid legal standing. International organizations and almost all European countries continue to recognize those leaders as legitimate, whereas Russia virtually alone recognizes the unelected parliament created by Lukashenka last December. The initial round in these unprecedented talks adjourned with meager results. The sides agreed only on the delegations’ format after the parliamentary delegation consented to include a staunch Lukashenka loyalist, who was a vice-chairman of the dissolved parliament and later repudiated it. There was no agreement on the negotiations’ mandate. The presidential side ruled out discussion of the legitimacy of the November 1996 referendum and of the resulting new constitution and parliament, which have enabled Lukashenka to govern dictatorially. The opposition, branding the referendum illegitimate, upholds the legal continuity of the dissolved parliament and the validity of the 1994 constitution. The dialogue is to be resumed on July 15 under the EU’s mediation.

Popular Front Charts Strategy at Landmark Congress

At a congress in Minsk on June 20-21, the Belarusan Popular Front reelected the emigre Zyanon Paznyak as its chairman and Lyavon Barshchevsky as acting chairman. Paznyak last year received asylum in the U.S. and has since been politically active in Poland. In a videotaped speech to the congress, Paznyak defined the BPF’s main task as defending the country’s independence against "Russian imperialism" and against Lukashenka’s "occupation regime." To that end he called for the formation of a government in exile and a political campaign in Belarus to force Lukashenka’s resignation and to introduce an "anti-Russian and pro-NATO policy." Paznyak criticized the leaders of the forcibly dissolved parliament — most of whom were in attendance — for "betrayal" in giving up impeachment proceedings against Lukashenka last November and for attempting to negotiate with the president at that time and since. He also chastised BPF leaders for failing to stop the "betrayal." Yet Paznyak suggested that Syamyon Sharetsky, chairman of the forcibly dissolved parliament, could be appointed acting president in place of Lukashenka if Sharetsky "drops the idea of integration with Russia."

The majority of Paznyak’s proposals either did not carry the day or were diluted in the program. Barshchevsky’s co-report and the intervention of BPF vice-chairman Yury Khadyka were less divisive than Paznyak’s and more oriented toward winning and keeping a broad spectrum of allies. The main programmatic statement adopted by the congress, entitled "Belarus into Europe: A Strategy for Defending Independence," describes the choice before the country as either Europe and democracy or Russian hegemony exercised through Lukashenka’s dictatorship. The statement describes the BPF as sharing "Western conservative principles" centered on the nation state and family values, alongside liberal principles centered on human rights. The program envisages a "mass national liberation movement" including rallies and demonstrations, civil disobedience, "street democracy," and cultural and educational activities to promote the native language and civic awareness. The aim is to pressure Lukashenka into resigning peacefully, reinstate the 1994 constitution and the parliamentary form of government, and hold free elections.