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Press Review: Russia and the World Economic Forum

  • Ron Synovitz

Prague, Feb. 5 (RFE/RL) - Western press commentary today assesses the impact of Russia's political and economic problems on the future of market reforms.

A news analysis piece by Richard Beeston in today's London Times says that President Boris Yeltsin risks destabilizing Russia's economy through "spending sprees" designed to "shore up" his "sagging popularity." Beeston says there is a dangerous precedent in the Kremlin's weekend deal to pay striking miners several months of back wages, and to offer subsidies to the ailing coal industry. Beeston, who is the Times' Moscow correspondent, writes that Yeltsin's "surrender" after only 48 hours is further evidence that he "plans to lavish subsidies and pay rises on industry as part of his reelection campaign." Beeston predicts that, despite the precedent set by Yeltsin to resolve the miners' strike, the International Monetary Fund will go ahead and approve a $9 billion loan package to Russia later this month. He says: "Whatever doubts may be growing about Mr Yeltsin's commitment to reforming Russia's economy, nobody in the West wants to cut him off from financial help as he prepares his election campaign against a strong Communist challenge."

An analysis piece by Didier Francois in the liberal French newspaper Liberation also looks at the miners' strike. It says Russia's trade unions are shouting "victory," but the coal miners themselves remain unhappy and think the deal is "nonsense." To support their assertion, the Liberation quotes one miner as saying that "We are like puppets. They pull the strings once to the right, once to the left. The directors of the mines, the trade unions, the government.... all this is a game. It's a smoke screen. We voted to go on strike. We didn't vote to stop the strike. But who will be the head of the movement if we don't have real unions. In the end, I don't care anymore. At least I will have my pay from October." Francois concludes that the inability of the coal industry to pay its workers is only the beginning of a series of ailments in the Russian economy. He says financial illness is creeping into all sectors of Russian production.

The Financial Times of London publishes an opinion today by Anatoly Chubais, the Russian Federation's former first deputy prime minister in charge of the economy whose resigned under pressure last month. Chubais says that financial stabilization and democratic politics do not mix. Chubais explains his view by saying that Russia has "real chances" of reducing its monthly inflation to one percent a month by mid-year. He says Russia also could reach agreement with the IMF on the crucial $9 billion loan package and restructure its debt to western government creditors in the Paris Club. But, Chubais continues, "there is a danger of populist government expenditure ahead of the presidential election in June that will increase the budget deficit." Chubais says such spending "would not only give a boost to inflation, it would also lead to a crisis on the foreign exchange and bond markets, and threaten a collapse of the banking system before the election." He warns that "populist spending" also threatens the agreements with the IMF and the Paris Club. Chubais concludes that any spending increases would make it clear "that my departure from the government last month was more than a change in the membership of the political elite: it would be a change in economic policy capable of inflicting a fatal blow to those who made this decision."

An editorial in Britain's Independent today looks to the future in Russia, beyond the June presidential elections. The paper says that the news for Yeltsin is "unremittingly bad," and that the dividing line between Yeltsin and the opposition is growing more blurred.. The newspaper warns that: "the time is approaching, possibly quite fast, when the West may have to reconsider its reliance" upon Yeltsin. It says: "Nothing but disappointment can result from a policy of backing one Russian horse in an election whose outcome the West has few means to influence." It says that the overwhelmening interest for the West is that "Russia should act as a responsible international power, abiding by arms control treaties, not threatening its neighbours, and helping rather than hindering the West in areas of joint concern such as former Yugoslavia." The Independent concludes that for this type of Russia to take shape, "market-based economic reforms must flourish and democratic values have to underpin domestic politics."

Britain's daily Guardian today reports that western financial leaders at the World Economic Forum in Davos, Switzerland reacted sceptically when Russian Communist Party leader Gennady Zyuganov promised that a return to the order and authority of the Soviet era would end Russia's economic chaos and allow foreign business to thrive. Guardian correspondent Larry Elliott described Zyuganov's presence at the conference "a two day charm offensive" marked by clashes with another Russian presidential hopeful, Yabloko faction leader Grigori Yavlinski.

Wall Street Journal correspondent Janet Guyon, who also covered the World Economic Forum, writes today that Russia is "suffering from reform exhaustion" and is "in danger of slipping backward." Quoting panelists at the conference, Guyon says: "Emerging market countries do reach a critical point where an elite class of rich entrepreneurs is created. This group can either successfully continue pushing politicians for free-market changes or it can become targets of a backlash." Still, Guyon says, the source of today's capital in Russia is far healthier than in the 1970s, "when syndicated bank loans financed national deficits, corrupt governments and white-elephant infrastructure projects."

The German newspaper Handelsblatt today offers yet another view of the weekend's events at the World Economic Forum. Handelsblatt notes that the attention of the international press was largely focused on Zyuganov. The newspaper says Zyuganov's debut in the international arena was characterized by "bitter remarks" and "emotional outbreaks.". The paper then prints reactions of other Russian leaders to what it described as a circus environment. Alexandsandr Shokhin, a leader of the centrist "Our Home is Russia" party, says he thinks Zyuganov's communists will not be able to "entirely turn back the flow of reforms." But Shokhin predicts the economy will slow down severely during the next three or four years. The paper quotes Shokhin as saying: "The large majority of the population will not have access to democracy and market economy." Handlesblatt says Yabloko faction leader Grigory Yavlinski also is concerned about the resurgence of the Communist Party. The newspaper quotes Yavlinski as saying: "The West does not need to do anything more... The billions with which the West planned to help improve the democracy and the market economy are lost. They hae been used by Yeltsin to finance the Caucasus war." Meanwhile, the newspaper describes Zyuganov as a man who is amused by his success. Commenting on the western economic and financial leaders who had to stand in line to enter the crowded conference room before his speech, Zyuganov reportedly said: "I am happy that people have to stand in line not only in Russia, but also in Switzerland."