BUSINESSWEEK ONLINE : JANUARY 17, 2000 ISSUE
INTERNATIONAL -- EUROPEAN COVER STORY Commentary: How Yeltsin Blew Russia's Big Chance (int'l edition) Boris N. Yeltsin is a lot like the country he ruled for most of the past decade. Like Russia, he's big, boisterous, and full of braggadocio. Most of all, he's unpredictable. Unexpected as it was, Yeltsin's sudden resignation on the last day of the millennium was very much in character. Unfortunately, so was his final act as President. By resigning, he speeds up the timetable for the next presidential election to March 26 from June. And just three hours before he resigned, he approved a law requiring each candidate to collect the signatures of up to 1 million registered voters in less than six weeks to win a place on the ballot. The accelerated schedule makes it tough for anyone but Yeltsin's chosen successor and protege, acting President Vladimir V. Putin, to get on the ballot or wage an effective campaign. Yeltsin wants to go down in history as the man who brought democracy, justice, and prosperity to Russia. But he has repeatedly tarnished his own legacy by skewing the rules in favor of insiders. He did it one last time on New Year's Eve. DAMAGING DEALS. Yeltsin failed to create a genuine democracy, a genuine market economy, or an independent legal system. He undoubtedly had good intentions in the euphoric days after he broke the back of the communist system in late 1991. But at key junctures, he--or his advisers--chose to make ultimately damaging compromises in order to win the support of elites for their reforms. The compromises started as tactical retreats. But they ended up sabotaging the entire system. In the early 1990s, Yeltsin aide Anatoly B. Chubais pushed through mass privatization by giving Soviet-era managers a controlling stake in the companies they ran. Freed from the oversight of government ministers but unfettered by U.S.-style securities laws, many managers stole company assets and ignored minority shareholders. Few companies were closed or restructured. Most infamous were the ''loans-for-shares'' deals in 1995. Bankers close to the Kremlin gained control of Russia's biggest oil companies for a song. In turn, they bankrolled his 1996 reelection campaign and used their control of big media companies to conceal his illness from voters and tar his Communist opponent, Gennady A. Zyuganov. True, Yeltsin took a risk by defying his advisers and deciding to hold the 1996 election even though he badly trailed Zyuganov in the polls. But his cronies manipulated the result through money and the media. Now, Yeltsin himself is manipulating the election for his successor. The earlier the better for Putin, whose popularity could wane if the war effort in Chechnya goes wrong. Putin may yet prove an effective President. But Yeltsin's machinations hardly make for an auspicious start to the new era. Of course, in Yeltsin's Russia, there is no such thing as a level playing field. Cronyism and corruption pollute the courts, the government, and the economy. The compromises created a caste of businesspeople with an unfortunate credo: Grab what you can as quickly as you can. Meanwhile, high taxes, bribe-taking bureaucrats, and the mob stifle entrepreneurs. Yeltsin deserves much credit for crushing the totalitarian Soviet system. Continuing the efforts of Mikhail Gorbachev, he gave Russians the freedom to speak out and travel freely. He allowed the other former Soviet republics to separate from Russia peacefully. Those achievements cannot be underestimated. But he squandered the goodwill of the Russian people and foreign investors by creating a corrupt regime. The man who climbed on the tank in 1991 to face down Soviet power missed a historic opportunity to create a just and prosperous Russia. By Patricia Kranz Europe Editor Kranz has covered Russia since 1990. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Putin's Russia (int'l edition) EUROPEAN COVER IMAGE: Putin's Russia TABLE: The Acting President's Agenda CHART: The Volatile Russian Economy Commentary: How Yeltsin Blew Russia's Big Chance (int'l edition) INTERACT E-Mail to Business Week Online

Copyright 2000-2009, by The McGraw-Hill Companies Inc. All rights reserved. Terms of Use   Privacy Notice