Russia keeps up the war with inflation

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The Independent Online
Buffeted by a storm of anger over bungled currency reform, the Russian government yesterday presented a new three-phase economic blueprint, pledging to keep up the fight against inflation and predicting that overall recovery would not begin for at least another three years.

The plan, presented to a divided cabinet by the Prime Minister, Viktor Chernomyrdin, rebuffed demands for a sharp shift away from market reform from more cautious officials, including the Economics Minister, Oleg Lobov, and a newly-confident and pugnacious parliament. But nor does it wholly endorse the proposals of the most radical reformers such as the Finance Minister, Boris Fyodorov, who was chided for breaking ranks over the rouble reform.

The Supreme Soviet, the standing legislature, yesterday resumed its political offensive, reconvening for the second time in what was supposed to have been a month-long holiday. It voted overwhelmingly to suspend a decree by President Boris Yeltsin speeding up pivatisation. It also passed a resolution removing the chairman of the Central Bank, the author of last month's currency fiasco, from the cabinet. Under the constitution the bank chief is responsible to parliament, but Mr Yeltsin had insisted that he should sit in on cabinet meetings.

'The government stands for centrist policies,' Mr Chernomyrdin was quoted by Itar-Tass as telling an expanded cabinet session attended by regional leaders as well as ministers. 'The first signs have emerged of the crisis lifting.' Its end, though, is not predicted until the third and final stage of yesterday's plan, due to start in 1996. The evening newspaper Izvestia, which earlier this week warned of conservative resurgence that could derail reform, yesterday hailed the new economic blueprint.

A struggle for control of economic policy, like that for control of the Central Bank, is certain to continue. Compounding confusion is the behaviour of President Yeltsin, who keeps disappearing from public view at moments of crisis and has squandered much of the political momentum gained with his decisive victory in a national referendum on 25 April. He made a trip to the central Russian city of Oryol on Wednesday, but the visit did not calm speculation in conservative newspapers of serious ill-health. Pravda compared Mr Yeltsin's rule in the Kremlin to that of Brezhnev and Chernenko during their final months of dotage. Mikhail Astafyev, a fiercely nationalist legislator, has demanded a parliamentary committee to examine the health of Mr Yeltsin and other leading officials.

A more immediate and serious threat to Mr Yeltsin is a campaign by the Supreme Soviet to remove key planks of his government's reform programme. The suspension of his privatisation decree was yesterday approved by a lopsided majority of 140 to 15. It followed a slew of resolutions passed by similar margins shortly before the summer recess last month which, if ever implemented, would fuel hyper-inflation, double the budget deficit and otherwise demolish the government's economic programme.

The programme unveiled yesterday by Mr Chernomyrdin, however, pays little heed to this legislative rampage and sticks more or less to previously declared targets. It envisages a budget deficit of around 8-10 per cent of GDP and inflation of around 5-7 per cent a month by the end of the plan's first stage next year. Inflation last month was 19 per cent, up from 17 per cent in June and a sign that the danger of hyper-inflation, though reduced, is not yet over. 'Stabilisation of the financial system and anti-inflation measures remain the major areas,' Tass quoted Mr Chernomyrdin as saying.