Yeltsin pledges to ease reforms

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The Independent Online
PRESIDENT Boris Yeltsin yesterday sought to recover his populist appeal with a public dressing-down of his unpopular free-market advisers and a pledge to adjust economic reform to correct their mistakes.

In a 50-minute parliamentary address clearly designed to burnish his own reputation and tame his unruly conservative audience, Mr Yeltsin said extraordinary measures were needed to temper past errors. But the stern speech, which criticised ministers, dismissed demands that the government, led by the Prime Minister, Yegor Gaidar, resign. 'Despite the difficulties and losses, the reform has started and is continuing,' Mr Yeltsin said. 'We have no other road but to switch the economy to market relations.'

This road, though, has forked, deviating from the clear monetarist line originally fixed by Mr Gaidar and his cheer-leaders at the International Monetary Fund. President Yeltsin's speech made clear that other, more conservative, voices must be heard, particularly that of the Civic Union, an alliance of state-industry chiefs more wedded to the central plan than the marketplace.

It is these industrialists who present the only coherent opposition. They do not want to halt reform but see China, not the West, as the best model for orderly change. They have secured several key appointments and, many suspect, a pact with Mr Yeltsin that keeps Mr Gaidar in place but chips away at his policies.

In parliament yesterday Mr Gaidar ridiculed talk of China as a model, reminding his critics that Russia was a democracy: 'There is no easy way out of the crisis and there is no . . . alternative to our strategy.'

In his own remarks, President Yeltsin tried to appease all sides. He endorsed a wholesale sell-off of state assets, appealed to parliament to stop holding up land reform and insisted that only the market could make Russia a great power. But he also accused Mr Gaidar's government of 'unsuitable scepticism' towards alternative ideas. 'They are to be used,' he said and must not be rejected just because 'they are not invented by Gaidar'.

Mr Yeltsin's popularity has dropped sharply since his days of glory during the coup attempt last year, slipping in tandem with the steady slide of the economy. As if to highlight his troubles, Moscow's fledgling currency market yesterday dumped the rouble to a new record low against the dollar, at 342, just as it did two weeks ago when the architect of Moscow's economic policies, Mr Gaidar, gave his own speech before parliament.

Russia's dash towards the free market, launched in January with the scrapping of fixed prices for most goods and accelerated last week with the start of sweeping privatisation, has caused severe hardship and deep cynicism among much of the population. Inflation is expected to be 1,200 per cent for the year, and industrial production will be down 20 per cent.

In a clear bid for popular sympathy, Mr Yeltsin vowed to stamp out the use of foreign currency in shops, which favours a small minority with dollars and embitters ordinary rouble-earning Russians. Other steps aimed at the common man included a decision to allow privatisation vouchers to be used for the purchase of apartments as well as shares in state firms, a promise that there would be no further rise in the price of oil this year and a vow to stop 'the cancerous growth' of corruption.

(Photograph omitted)