Russia finally got a new government, but there was little optimism that its partial return to Soviet era policies could lift the country from its current economic crisis. Russia’s assertiveness in the foreign policy realm, meanwhile, appeared set to continue unabated. Moscow clashed yet again with the West over the crisis in Kosovo. More important, perhaps, the new political strength of Russia’s left wing forces served to raise tensions between Moscow and Kyiv.
RUSSIA’S NEO-SOVIET GOVERNMENT
There was a sense of drift in Moscow as Prime Minister Yevgeny Primakov struggled to form a cabinet. Many leading politicians were unwilling to join a government that was not expected to last long. Finally, on September 30, the Kremlin announced the appointment of seven new ministers, leaving only one post still vacant. The new appointees included Sergei Kalashnikov, a member of Vladimir Zhirinovsky’s ultranationalist Liberal Democratic Party. Kalashnikov accepted the post no one else wanted–the thankless job of minister for labor and social welfare.
The remaining vacancy was for a deputy prime minister with responsibility for negotiating with the IMF and the World Bank. That post fell unexpectedly vacant when Aleksandr Shokhin handed in his resignation after only thirteen days in office. Shokhin said he was stepping down in protest against the re-appointment as finance minister of Mikhail Zadornov. Shokhin said Zadornov played a key role in the August 17 decisions to devalue the ruble, freeze the domestic debt market and declare a moratorium on some foreign debt repayments. These decisions plunged the country into its worst financial crisis since the 1991 collapse of the USSR.
Former minister Boris Nemtsov told the newspaper Vremya MN on September 29 that, while Zadornov had indeed been involved in those decisions, the real reasons for Shokhin’s resignation were quite different. According to Nemtsov, those reasons were “the professional and ideological isolation of Primakov’s cabinet, constant showdowns between top officials, the difficult financial situation and the necessity of working hard in a left-wing government.”
Shokhin’s departure, coupled with Yeltsin’s dismissal of the government’s remaining reformer, deputy premier and tax chief Boris Fedorov, shifted the political center of gravity further to the left and away from free-market policies. First Deputy Prime Minister Yuri Maslyukov, formerly head of USSR Gosplan, emerged as the key economic policymaker. He was working on an economic program that was to be presented to the cabinet on October 1, but let slip few clues about was likely to be in it. Central Bank Chairman Viktor Gerashchenko pressed his own proposals for rescuing the Russian economy. These included printing at least 40-50 billion rubles (US$2.5-3.1 billion). by the end of the year to meet urgent budget requirements in the absence of external financing. This provoked a debate within the government between those who favored minting money, saying it was essential to pay off chronic wage and pension arrears and that it would kick-start the economy, and those who warned that hyperinflation would be the inevitable and catastrophic result.
The IMF warned that it would not release the next tranche of its US$22.6 billion international aid package agreed to in July unless the government’s economic program warranted it. Before he announced his resignation, Shokhin threatened that, unless Russia got more aid from IMF, it would default on its international debt obligations. The IMF insisted it would not be blackmailed and that Russia would be better occupied improving tax-collection and reducing the budget deficit. Tax receipts for September were only half of the planned amount.
One policy promised by Primakov’s government was to establish, as of October 1, a state monopoly on alcohol. Only enterprises in which the state owned a controlling stake would have the right to produce alcohol or engage in wholesale trade in liqueurs and vodka. Finance Minister Zadornov predicted that the move would double revenues from alcohol and net the state somewhere in the region of 15 billion rubles yearly. Zadornov said these revenues would be divided more or less equally between federal and local budgets. Observers were skeptical, since this was at least the third time since 1992 that the Russian government had declared its intention to turn vodka back into a state monopoly. Russians drink, on average, half a bottle of vodka a day each. The trade is big business. So far, however, all of the government’s efforts to assert control over it have succeeded only in further boosting the production of moonshine and its sale on the black market.
Preoccupation with Maslyukov’s plans did not conceal the fact that the roots of Russia’s crisis were not primarily economic but political. The crisis was rooted in the weakness of the state, the debility of the president, and the absence of trust between rulers and ruled that has dogged Russia through the centuries. Donald Johnstone, secretary general of the OECD, warned in mid-September that “No amount of money is going to solve [Russia’s] problem. What is going to work is viable institutions.” Sadly, it is institutions that Russia, so rich in many respects, most crucially lacks.
RUSSIAN FOREIGN POLICY: STILL ASSERTIVE
Russia’s change in government, which included the appointment of Igor Ivanov as the country’s new chief diplomat, appeared at least initially to have weakened in no way the more assertive foreign policy that was the hallmark of the Primakov era. Despite Russia’s economic and political turmoil, and the seeming need to garner additional financial aid from the West, Ivanov staked out hardline positions on several key international issues in his first weeks as foreign minister. In remarks to reporters on September 30, for example, Ivanov strongly restated Moscow’s opposition to any effort by NATO to extend membership to states of the former Soviet Union. The new minister reprised a line from former Foreign Minister–and current Premier–Primakov in saying that Russia had drawn a “red line” around the countries of the former Soviet Union. He warned NATO that any attempt to cross that line would bring an “adequate” response from Moscow.
Continued assertiveness was also evident in the actions of Russian diplomats dealing with the crisis in Yugoslavia. Moscow did join with other UN Security Council members on September 23 in passing a resolution that demanded an immediate cease-fire and the start of negotiations to end the Kosovo conflict. But Russian officials, who have been steadfast supporters of the hardline Serb authorities in Belgrade, also made clear that Russia had backed the September 23 resolution only because it did not specifically authorize the use of military force by the international community to end Belgrade’s bloody crackdown in Kosovo.
In the days that followed, moreover, the respective positions of Russia and many of the Western powers appeared to grow farther apart on Kosovo. Amid indications of a looming humanitarian crisis in the troubled province, NATO defense chiefs meeting in Portugal on September 24 issued a virtual ultimatum to Yugoslav President Slobodan Milosevic. They also approved an “activation warning” that brought the alliance to the brink of launching a phased campaign of air strikes against Yugoslavia. NATO officials meeting in Brussels nearly a week later intensified their warning to the Yugoslav leader. That action came amid reports of new atrocities committed by Serbian security forces in Kosovo.
Moscow remained unbowed, however. Ivanov warned on September 30 that the proposed NATO military actions would only exacerbate the situation in the Balkans. He also said that NATO strikes on Yugoslavia–absent an authorizing resolution from the UN Security Council–would in fact be strikes against the UN and the Security Council. The remarks by Ivanov came as Moscow continued to decry what it has said are attempts by the West to deprive Russia of its influence in the Balkans. On September 29 a Russian Foreign Ministry spokesman harshly criticized a U.S.-led initiative by which a group of seven southeastern European countries agreed to create a multinational military force to help keep peace in the Balkans. The Russian spokesman castigated the group for failing to invite Moscow to take part in its deliberations.
THE END OF THE YELTSIN-KOHL ERA
Moscow reacted warily to the electoral defeat of German Chancellor Helmut Kohl and his imminent replacement by Social Democrat leader Gerhard Schroeder. Moscow put a brave face on over the election results, welcoming Schroeder’s victory and reaffirming Russia’s desire for continued cooperation with Germany. But there was little doubt that Russian leaders felt some trepidation over the defeat of the long-time German chancellor. Kohl had emerged in the years following the Soviet Union’s demise as both a close personal friend of President Boris Yeltsin and as perhaps Russia’s most steadfast booster in the West. Kohl’s support had helped bring some US$30 billion in investment from German banks into Russia. Much of that money was guaranteed by the government, a fact that left Kohl vulnerable to criticism as Russia’s financial crisis deepened. Not surprisingly, Schroeder made Russian-German relations a campaign issue. He accused Kohl of having invested too much in his friendship with Boris Yeltsin. Schroeder also questioned Yeltsin’s ability to maintain stability in Russia.
In the wake of Schroeder’s victory there was some speculation that German foreign policy might be reoriented somewhat away from France and Russia and toward Britain and the United States. But Schroeder attempted to dispel some of Moscow’s concerns at least over the future of Russian-German relations. He told Yeltsin during a telephone conversation on September 29 that he would travel to Moscow soon after he is confirmed as German chancellor. In a separate interview with a German newspaper, Schroeder said that his Social Democratic party would seek to maintain continuity in German foreign policy. Russian commentators, meanwhile, contented themselves with the thought that, while the Yeltsin-Kohl era might be history, the two countries still had broader strategic interests that would ensure continued friendly relations.
UKRAINE CONTENDS WITH POLITICAL SPILLOVER FROM RUSSIA’S MALAISE
Russia’s economic and political crisis shook the fundaments of Russian-Ukrainian relations this fortnight. The latest developments suggest that the uneasy detente, reached last year mainly through Ukrainian efforts and with the Kremlin’s belated cooperation, may be about to unravel.
That fragile and incomplete detente, representing a temporary respite for Ukraine, rested on Presidents Boris Yeltsin’s and Leonid Kuchma’s common goal of holding their respective Red oppositions at bay. The Kremlin and the Mariinsky Palace well realize that a Red revanche in either of the two countries could send political convulsions into the other. Communists on both sides evidently realize that too, as implied in their saying that Russian politics and Ukrainian politics relate to each other like two communicating vessels. In order to contain that threat, Yeltsin and Kuchma had since 1997 traded mutually beneficial if limited concessions, calculated to deprive each other’s leftist oppositions of a major political card: the card of Russian-Ukrainian “reintegration.” The resulting modus vivendi has been of greater immediate importance to the Ukrainian government, which went through an agitated parliamentary election this year and faces an even more turbulent presidential contest next year.
The top leaders’ modus vivendi left many important issues unresolved. Its basis is now being sapped by internal processes in both countries. The economic crisis and other factors in Russia and Ukraine are strengthening those forces that yearn, in both countries, for a Ukraine returned to Russian tutelage. The Kremlin has been forced into adopting parts of the leftist-nationalist agenda and personnel, and looks set to slip further down that slope. Unlike the Kremlin, Kuchma looks set for confrontation with his leftist opposition; but he has few internal or external allies, and he stands exposed to the communicating-vessels effect from Russia. That effect became spectacularly evident this fortnight.
SELEZNEV CALLS UKRAINE TO ORDER
Heading a Russian Duma delegation to Kyiv on September 28-29, the Duma’s communist chairman, Gennady Seleznev, played the part of a would-be governor who had descended on an unruly province. In his talks with Ukrainian Foreign Minister Boris Tarasyuk and parliamentary leaders, and in his address to the host country’s parliament, Seleznev used unusually blunt language in presenting a list of recriminations and demands.
Seleznev took Ukraine to task because of its relations with NATO, attacking Foreign Minister Borys Tarasyuk personally for his pro-Western orientation. The Duma leader termed “fundamentally wrong” Kyiv’s limited participation in the CIS, and urged Ukraine to become a “full-fledged” member. He called, moreover, for the expansion of the Russia-Belarus Union into a tripartite Russia-Ukraine-Belarus Union, describing it as an economic and security bloc, a “Slavic” counterweight to the West. Seleznev charged against all evidence that Ukrainian authorities restrict the public use of the Russian language. He also referred to Russians and Ukrainians as “a single people,” thus in effect denying Ukrainian national identity.
This latter comment virtually echoed Patriarch Aleksy II’s and Belarusan President Alyaksandr Lukashenka’s references the preceding week to “Great Russians” and “Little Russians”–meaning Russians and Ukrainians–as parts of one people. The Russian Church leader and the Duma’s communist leader revealed on this issue a common position, rooted in the official ideology of the former Russian Empire.
Responding to Ukrainian concern about the Duma’s unwillingness to ratify the bilateral interstate treaty, Seleznev named two conditions for ratification. They are: Ukrainian consent to long-term basing arrangements for Russia’s Black Sea Fleet; and Ukrainian acceptance of the Russian position on NATO’s enlargement. The former condition is old, the latter is new, and Seleznev emphasized the new one. The treaty, signed by Presidents Boris Yeltsin and Leonid Kuchma in May 1997, recognizes Ukraine’s territorial integrity and current borders. The Ukrainian parliament promptly ratified the treaty. But the Duma’s unwillingness to ratify deprives the document of legal force and means that Russia’s pledge is nonbinding. Against the background of political statements in Moscow that question the border, and amid deepening uncertainty about Russia’s direction, Kyiv is anxious to secure Russian ratification of the treaty.
UKRAINIAN REACTION REFLECTS INTERNAL RIFTS
Seleznev’s performance triggered loud protests from the Ukrainian national-democrats. The Rukh parliamentary group and its allies walked out of the chamber and later signed a declaration of protest. But the reaction of these deputies–some eighty to ninety altogether–served to illustrate their relative isolation in the 450-strong chamber. Half the parliament membership–the communists and other leftists–cheered Seleznev. Parliament Chairman Oleksandr Tkachenko somewhat awkwardly tried to focus the discussion on the ratification of the interstate treaty. The Ukrainian left does consider the ratification important, if only ahead of elections. It would not hesitate, however, to sacrifice Ukraine’s ties to NATO in the bargain. Tkachenko and others dwelt as well on Ukraine’s full accession to the CIS Interparliamentary Assembly–a symbolic issue bitterly fought over by the left and the national-democrats in Ukraine.
The top leadership’s reaction was firm but restrained. Kuchma announced that he “categorically opposes” any Russian-Ukrainian-Belarusan union or “USSR-like union.” He also pointed out that the CIS Economic Union, and the CIS in general, “have not led anywhere” in terms of economic or any other benefits. Most significantly, he vowed that Ukraine would not pass up the “unique chance it presently has to fulfill the dream of many generations”–that is, state independence. Tarasyuk defended his pro-Western policy, insisting that “Ukraine’s future is in Europe;” but he also pointed out that “hardly any political force in Ukraine would object to close and friendly relations with Russia.” The Ukrainian foreign minister, moreover, warned that the introduction of pan-Slavist ideas in Russian policy would have divisive and destabilizing effects in Ukraine and in Russia itself. Prime Minister Valery Pustovoytenko and other government members complained that the Russian-Ukrainian free trade agreement and ten-year economic cooperation program have remained on paper only, that Moscow double-taxes major imports from Ukraine, and that bilateral trade has been shrinking since even before the onset of Russia’s financial crisis. These complaints, however well-founded, ducked the central political issues and served to highlight Ukraine’s dependence on Russian trade. The uneven and indeed contrasting reactions in Kyiv highlighted the polarized nature of the Ukrainian parliament, the existing potential for polarization in the country, and the daunting task faced by the executive branch in holding society together under the twin pressures of economic crisis and of a resurgent nationalist left in Moscow.
CONVERGENT FORECASTS FROM OPPOSITE CORNERS
In Moscow, Duma First Vice-Chairman Vladimir Ryzhkov–of the moderate Our Home is Russia–unexpectedly endorsed Seleznev’s views. Ryzhkov added that Seleznev had spoken in Kyiv “for the entire Duma.” That spirit would seem to reflect expectations regarding the policy of Russia’s executive branch toward Ukraine. Viktor Ilyukhin, the communist chairman of the Duma’s Security Committee, found that newly named Prime Minister Yevgeny Primakov shares the communists’ basic views on Russian-Ukrainian relations. Ilyukhin summed up those views as entailing restoration of “grand friendship” in the form of “Slavic unity” and a “new association” of states, albeit short of restoring the USSR. Ilyukhin is one of the Duma’s foremost foreign-policy hardliners, sometimes to the left of the official Communist Party position.
Duma deputy Konstantin Borovoy, a virtually isolated democrat in that chamber, similarly forecast that Primakov will “try to bring Ukraine closer to Russia’s strategic interests.” Borovoy predicted that Primakov would seek to isolate Ukraine from NATO and the European Union in order to undermine Ukraine’s independence. According to Borovoy, such a course would reflect Primakov’s own “anti-American, anti-NATO, pro-imperial positions.”
The two forecasts, from opposite sides of the political spectrum, coincided in their substance, even as one approved while the other disapproved of Primakov’s inclinations. Just as significantly, neither attributed any significant role to President Yeltsin in shaping policy toward Ukraine. Yeltsin’s enfeeblement and the communists’ recent gains in Moscow and in Kyiv can indeed destabilize Russian-Ukrainian relations in the near term.