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Gorbachev's Hollow Victory


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GORBACHEV'S HOLLOW VICTORY

For weeks, street banners, subway posters, newspapers, and television shows bombarded Soviet citizens with the refrain: "The future will be decided by every citizen . . . . Vote da for preserving the union." But when voters went to the polls on Mar. 17, they handed President Mikhail Gorbachev a hollow victory. While 75% backed Gorbachev's proposal, it just squeaked by in important cities like Moscow and Leningrad. Observes Gorbachev adviser Grigory I. Revenko: "I would not like to create an impression of euphoria."

Hardly. The much-ballyhooed plebiscite failed to produce any clear solution to help Gorbachev save the splintering nation. Instead, it became a catalyst for his principal rival, Russian Republic President Boris N. Yeltsin. In an obvious swipe at Gorbachev, a decisive 70% of those voting in Russia backed Yeltsin's plan to have Russia's president picked in direct elections. "So the argument between these two politicians will get hotter, while the degree of anarchy is likely to rise further," says Eberhard Schulz, a Soviet expert at the German Foreign Policy Society in Bonn.

TUG OF WAR. Held hostage by the political tussling is the collapsing Soviet economy. Soviet oil exports, the country's principal source of hard currency, will plunge a staggering 50% this year. Soviet enterprises are at least $5 billion behind in paying their foreign-trade debts. Industrial production could fall by 15% to 25% of what it was last year.

Indeed, virtually every major decision facing the Soviet Union has become ensnared in the high-stakes tug-of-war between Gorbachev and Yeltsin. Neither is strong enough to crush the other, so they have settled down to a long-term struggle aimed at assembling coalitions broad enough to seize or consolidate ultimate power. Gorbachev is backed by the military, the KGB, and the central bureaucracy, but Yeltsin has enough popular support that a crackdown against him would be unacceptably bloody, even by Soviet standards.

Western analysts are coming to recognize that it could possibly be years before one man--and one system--emerge on top. That is putting the Bush Administration in the awkward position of adopting a "two-track" policy in which it sends out feelers to the republics while at the same time maintaining ties with Gorbachev.

The next round in the Soviet political fight will come on Mar. 28. Yeltsin faces a fierce showdown with his conservative critics at a session of the Russian Republic's Congress of People's Deputies. They will seek a vote of no confidence in Yeltsin and possibly his resignation. But Yeltsin hopes to derail his conservative opponents. He intends to flaunt the support he has garnered through the referendum and from 280,000 coal miners now on strike in Russia and the Ukraine.

And although he has so far failed to come up with a viable economic reform package, his aides are working feverishly on three new plans. The most radical would sell off 20% of Russia's state-owned farms and privatize about 30% of other state assets starting in June. To shield the republic's economy from the almost valueless ruble, Yeltsin may introduce a complicated financial scheme to replace payments in cash with special credit cards. Eventually, Russia may create its own exchange rate for the ruble.

Gorbachev's long-term strategy is still carefully shielded. Some Soviet-watchers worry that Gorbachev could interpret the vote for his version of the union treaty as a pretext for cracking down on troublesome republics. That might be necessary if people in the streets react strongly to price hikes, planned for Apr. 2, that will triple the price of meat, double the price of milk, and raise the price of clothes by up to five times.

REFORMER'S MANTLE. But Gorbachev's camp is eager to encourage the impression that he will regain his mantle as reformer. They say Gorbachev will call for quicker moves to privatize, while building social safety nets to cushion the blow from price hikes. That strains credulity among some Kremlinologists. "Gorbachev has hit his level of ignorance on economic reform and won't go further," says a senior Soviet expert in the Bush Administration.

The length and intensity of the Gorbachev-Yeltsin fight will profoundly affect U. S.-Soviet relations. Washington is facing an ever more delicate balancing act with the country's competing power centers. When Secretary of State James A. Baker III traveled to Moscow on Mar. 14-16, he made his usual stops in the Kremlin, but he also met with representatives of the three Baltic republics, secessionist Georgia, and Russia. Increasingly, the Bush Administration is stuck in the same dilemma as many Soviet citizens: wondering who is really in charge in the Soviet Union.Rose Brady in Moscow, with Igor Reichlin in Bonn, Amy Borrus in Washington, and Peter Galuszka in New York


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