The third vote is expected on September 14. In the week ahead, many Moscow pundits expect a concerted effort to engineer Boris Yeltsin’s departure from office. That has long been the goal of the Communist Party, the largest in the Duma. Increasingly it is seen as the goal of Boris Berezovsky, the most politically visible of the tiny group of insiders, called oligarchs, who control many of the assets in finance, energy, and communications that the state surrendered after 1991.
Berezovsky bankrolled Yeltsin’s re-election campaign in 1996 but last week told a radio interviewer that the president “will likely have to step down” to make way for “strong political authority.” Chernomyrdin, sounding like the strong authority Berezovsky has in mind, told Russia’s regional leaders in the upper house of parliament that he will introduce an “economic dictatorship” on January 1. Krasnoyarsk governor and would-be president Aleksandr Lebed, who is also linked to Berezovsky, then announced his support for Chernomyrdin’s confirmation.
Like other dictatorships, Chernomyrdin’s “economic dictatorship,” if it comes to pass, will not arise from any expression of popular will. Although the process by which Russia’s next leader will be chosen may turn out to be consistent with Russia’s constitution, it will not be democratic. Chernomyrdin, who has never run for any office, is the choice of about 3% of respondents in an August presidential-preference poll by the Center for Sociological Research.
Whether or not under Chernomyrdin’s leadership, the state seems certain to re-assert control over large portions of the Russian economy in the months ahead. The most likely process is a “velvet nationalization” in which the government pumps devalued rubles into insolvent banks and enterprises in exchange for equity, or takes control of companies that are delinquent in their taxes. An estimated 85% of all Russian companies, and virtually all the big ones, could be vulnerable to this latter tactic, and the retention of Boris Fedorov as head of the State Tax Service suggests it will be tried.
Banks and financial markets are not now functioning well enough to establish a value for the ruble, which is no longer either a store of value or a medium of exchange. But the government is already rapidly expanding the money supply and apparently will pay off the workers, pensioners, and other creditors with steeply devalued currency. That will give the “economic dictatorship” a clean slate — no ruble debts that could interfere with the creation of new monetary and fiscal policies. But of course, no credibility either. Russians who trusted in Russian money have lost their savings twice in this decade, in the hyperinflation of 1991-92 and in the crash of 1998. It’s hard to believe there are many foolish enough to trust the system once again. SUMMIT… President Bill Clinton’s visit to Moscow was a below-the-fold event in Russia’s tumult. Not so many months ago, the United States president let it be known that he would not make the trip until the Duma gave its assent to Start II, the bilateral nuclear-arms-reduction treaty signed in 1993 and ratified in the United States last year. The United States later backed away from the linkage when it became evident that the Duma would not act on Start II this year, and in the event strategic-arms control was scarcely discussed.
The presidents did sign two modest accords. One commits each country to inform the other when it detects a ballistic-missile launch anywhere in the world. That agreement may be operational in a year or two. The second requires each country to reduce its stockpile of weapons-grade plutonium by 50 tons. That will take years of negotiation and hundreds of millions of dollars to accomplish.
Most notably, President Clinton told students at Moscow State University that “You can build a prosperous future if you stand strong and complete — not run from, but complete — the transformation you began seven years ago.” Russians standing in the rubble of their economy, hoarding salt and sugar and meat and bread, must have wondered if the leader of the Free World had utterly taken leave of his senses.