Businessweek Archives

The Real Hero Of Russia's Turnaround


Editorials

THE REAL HERO OF RUSSIA'S TURNAROUND

What a difference a year makes in Russia! Just nine months ago, its economy was in tatters, inflation was raging, and the radical reformers had been soundly defeated and ousted from government. Today, the economy is growing, inflation is way down, and a new class of entrepreneurs is spearheading the drive toward a competitive market economy (page 68).

After a four-day summit meeting with Russian President Boris Yeltsin, President Clinton should realize that the man responsible for Russia's surprising progress is not Yeltsin but Prime Minister Viktor Chernomyrdin.

In its first year, the Clinton Administration's Russia policy, designed by Deputy Secretary of State Strobe Talbott, focused totally on supporting one man--Yeltsin--and his small band of "shock-therapy" market radicals led by Yegor T. Gaidar. Their policy was to gut the state-owned sector and shut down all of the country's big industrial enterprises. Opponents of this strategy were perceived as antimarket statists. When the radicals were booted from the government, the White House was bereft and expected chaos in Russia.

It never happened. Chernomyrdin came in and found the right formula for privatizing without deindustrializing. Building from his centrist position as onetime czar of Russia's huge energy industry, he was able to enforce the reformers' tight monetary and fiscal programs while not threatening the military-industrial complex. By retaining his country's large enterprises and working to make them more efficient, Chernomyrdin held out hope that Russia could again become a global power. It was a brilliant strategy.

Billions of dollars from American and European hedge funds and merchant banks are now flowing into new Russian securities. Institutions and individuals are beginning to bet big on the new Russian capitalism. The pragmatists have proved right in their approach, and Washington, following in the footsteps of private investors, should recognize this fact.

Chernomyrdin's government still has a lot of work to do--cutting red tape, curtailing taxes, codifying commercial law, and battling criminals. But it has already earned the economic respect of the West. The Administration can help by championing Russia's entry into the General Agreement on Tariffs & Trade, pushing the International Monetary Fund to deliver on $8 billion in promised loans, and making $6 billion available for a currency-stabilization fund that pegs the ruble and makes it convertible. When it comes to economics, it's time President Clinton began talking to Prime Minister Chernomyrdin.


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus