Date: Sat, 28 Nov 1998 From: austgreen at glas.apc.org (Renfrey Clarke) Subject: Kagarlitsky on Primakov government
THREE SCENARIOS FOR YEVGENY PRIMAKOV By Boris Kagarlitsky
MOSCOW - From its first days, the Russian government of Yevgeny Primakov has been the target of fierce criticism from the national press. The commentators have condemned the government for inaction, but it is not this that really has them alarmed. The secret is now emerging: the government is bad not because it is inactive, but because sooner or later it will have to make fundamental decisions, and these decisions threaten to open the way to power for the left.
There is plenty of real cause for alarm in the condition of Russia today. If the new government cannot force abrupt changes, by the end of next year the country could cease to exist as a unified state, and the bulk of the population could face starvation. But to the liberal commentators, these are trifles compared to the real danger - that the prescriptions of the International Monetary Fund could be rejected, and various socialist approaches rehabilitated.
Meanwhile, it is true that Primakov has not been in any hurry. The number of ministers with left-wing views continues to rise, but no new course has been announced. As Russia's former chief of foreign intelligence, Primakov understands that it is better to be accused of inaction than to have to confront serious resistance.
The government does not seem to have any coherent plans, but this has not prevented the vice-premier in charge of economic matters, Yury Maslyukov, or Central Bank head Viktor Gerashchenko from working 14-hour days. The results are modest, but real: the exchange rate has been held to 17-18 rubles to the dollar, imports have somehow been resumed, and the decline in production has slowed. Mass discontent has not turned into uprisings. Emission has begun, but not on such a scale as to spur hyperinflation. The government has begun paying current wages more promptly, though the position concerning old wage debts remains unclear. In short, something like stabilisation has occurred, though it cannot be expected to last more than a few months.
The new premier has shown himself to be a virtuoso of apparatus intrigue, deftly shifting liberal politicians out of contention for cabinet posts, and inducing those already on board to jump ship. By early October a right-centrist government had been transformed into a left-technocratic one. The Communists too had finished up on the sidelines; party members were in the cabinet, but the party leadership itself was excluded from decision- making. All the appointees owed their posts not to party comrades, but to the premier.
For journalists, a "closed" government is a disaster. But the public, which is tired of political squabbles, finds this quality appealing, just like the "Brezhnevite" style of the premier, who reads official statements off scraps of paper.
A man who is rumoured to have organised more than one coup in the Arab world will not let himself be outmanoeuvred either in apparatus intrigues or in a propaganda war. But even the most brilliant apparatus intriguer will not necessarily prevail in the face of economic setbacks. None of the structural problems created by the catastrophe of August 17 has been overcome. This means that by spring, the short-term stabilisation achieved by the new cabinet may well be overtaken by a new bout of crisis.
Primakov's opponents are well aware of this, and the press is full of prophesies about the terrible consequences of left-wing rule, consequences predicted to hit in about two months' time. Why this precise date, when the cabinet has not yet taken a single decision of fundamental importance? The general dynamic of the crisis was in fact obvious even before Primakov began to be touted as a potential Prime Minister. After the first August "shock", a period of relief could be expected to follow (Primakov can now claim this as his doing), but it was equally predictable that given the state of the country's reserves of gold and hard currency, the financial crisis would eventually resume.
The notorious "oligarchs" calculate that the next bout of crisis will allow them to take their revenge and put their own person in the prime ministership. The oil magnate Boris Berezovsky has in practice declared war on the government. Yury Maslyukov has already let it be known that renationalisation of part of the property privatised during the 1990s is a real prospect. Two drafts of a law which would give the government the necessary powers have already been introduced to the Duma.
The hopes of the right wing that the government will suffer a rapid financial collapse are in fact unlikely to be borne out. The arguments about the appalling consequences of the rule of the left are as hypocritical as they are naive. Most people are not fools, and understand that the government is being forced to swallow the porridge cooked by its predecessors. More importantly, the political relationship of forces is not favourable to the liberals. The social base of the supporters of the "free market" in Moscow and St Petersburg has shrunk with the collapse of the financial system, and significant numbers of people in the "middle layers" are beginning to reconsider their positions. Meanwhile, the provinces are becoming more and more "red". If Primakov falls, provincial Russia will not demand the return of Chernomyrdin or Kiriyenko, but a more radical left-wing course. Finally, the Duma majority, which is much less inclined to think about ideology than to keep its eye on the provinces, will not allow a return to a liberal course. As for the next Duma, it is not hard to predict its make-up: it will be more "red" than the present one.
Finally, in conditions of crisis a return to neoliberalism would be impossible for purely technical reasons. Market decisions require a functioning banking and financial system. Any government this winter would be obliged to think not about a stable ruble, but of how at any cost to provide heating, keep the transport system functioning, and stave off hunger. The more acute the crisis, the greater the need for tough administration. In such a situation, serious liberal figures would not even try to take power, and non-serious ones would fall not after two months, but after two days.
Meanwhile, what about the Primakov government? There are three roads it might follow. The first and most likely is that of radicalisation. Faced with an increasingly acute crisis, the cabinet might decide to enact a whole series of measures which until now it has only talked about: nationalisation of the oil companies; of the gas monopoly Gazprom; of non-ferrous metallurgy; of the brewing and distilling combines; and of a number of banks. About twenty large enterprises would be affected. Most such companies have substantial hoards of hard currency, and this money would be accessible to the state in the event of nationalisation.
Paradoxically, the nationalisation of key enterprises would make it possible to meet the main demand put forward without success by liberal economists - for the lowering of taxes. The danger lies in the prospect that the nationalisation of companies capable of quickly topping up the budget might be followed by the takeover of loss-making ones. Maslyukov could be faced with a queue of enterprise directors and even owners demanding nationalisation. It stands to reason that some enterprises must be returned to state ownership for restructuring, but the ability of the state to provide such help is now quite limited.
Without reform of the state apparatus any set of policies will be implemented very inefficiently. Plans for the reform of the state apparatus are now being prepared; in the view of the people drafting these plans, the state apparatus is so demoralised that to break its resistance will not be difficult. If the quality of administration is to be raised, administrative reform in the regions is also indispensable, along with amalgamation of the subjects of the federation.
Working in semi-conspiratorial fashion, the government is almost invulnerable to its enemies, but is also incapable of mobilising mass support. In clashes with the oligarchs, such support will be indispensable.
Primakov will most likely reshuffle the government repeatedly. But where will he find new cadres? The resources of talent in the Duma "talk-shop" have largely been exhausted. The authorities do not rest on a political movement, and consequently it is hard to foresee a massive influx of fresh forces "from below".
If the government does not decide on radical measures, or if it implements them inconsistently or incompetently, the outcome would be woeful. The downfall of the Primakov cabinet would lead not to the return of the liberals, but to chaos. Sensing the helplessness of the central authorities, the regional leaders would begin taking key measures without reference to the centre. Mass discontent would assume the character of a spontaneous anti- Moscow movement. Only a dictatorship could normalise the situation, and not every dictator would be able to cope. Everything would be carried out for the sake of saving the homeland and democracy. But after unsuccessful attempts to implement dictatorship, neither the homeland nor democracy would necessarily remain intact.
This is not the whole sum of the choices before the government. The authorities might well take radical decisions quite different from those now anticipated. The apparatus will partly sabotage decisions, and partly implement them. The reform of the civil service will yield certain results, but less than hoped. Some of the oligarchs may be expropriated, while deals are likely to be struck with others. The financial crisis is unlikely to be overcome, but will not necessarily grow into catastrophe.
Popular discontent will grow in any case. An experienced intriguer, Primakov will most likely try to gain from the popular anger. In Russia, it is the president who ultimately answers for everything. We are ruled by a sick old man, who should long ago have been packed off into retirement. And if Yeltsin departs early from the scene, the constitution states clearly that he is to be succeeded by the prime minister.
For the armed forces and the interior ministry, the current premier is a familiar and reassuring figure, and for the security forces even more so. Unlike Yeltsin, he enjoys respect in the Duma. Why should he not be the national leader? In a meeting with heads of the subjects of the federation, Primakov spoke of the possibility of removing elected officials who were not fulfilling their responsibilities. Instead of becoming indignant, his listeners nodded approvingly. All of them, for some reason, thought not of themselves but of their neighbours - and of a particular official, the most important of all, who manifestly cannot cope with his duties.
As interim president, Primakov might well stay in office not for the prescribed three months, but for much longer. Rather than flagrantly rewriting the constitution to his own advantage, he would readily agree to expand the powers of the parliament and the government (thus insuring us against the ambitions of new, hungry power-seekers). Then, as a concession to the crisis, elections for the head of state would be postponed or handed over to some special college.
Ultimately, however, the outcome of the struggle will not be decided by the premier's political manoeuvres. The strength of the new government lies in its readiness to reject the heritage of the Yeltsin period and the economic prescriptions of neo- liberalism. Its weakness is its lack of a political base, of a powerful mass movement supporting it. Hence also the irresolution of the ministers. The weaker the pressure from below and from the left, the more dangerous the attacks from the right. If a broad political movement does not demand real changes, and if the masses of workers cannot become a real political force, there is no reason to hope that the Primakov cabinet will perform miracles.