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The Comeback Kid Of Russia? (Int'l Edition)


International -- Intl' Business: RUSSIA

THE COMEBACK KID OF RUSSIA? (int'l edition)

Yeltsin has no charismatic rival, and the economy looks better

On election day, voters thronged to the brick school building that served as the voting place in precinct 1465--a working-class Moscow neighborhood. One of the voters favoring the Communists--the big winners--was 83-year-old Maria Artshenava. In her youth, the Communists brought stability and pride, she said. Today's market reformers have brought only pain. With a pension of only $45 a month, "all I can buy is bread," she complained.

For the second time in two years, Russian voters have given President Boris Yeltsin the same message: Reforms have enriched just a sliver of Russian society while impoverishing the rest. At the same time, Russia's superpower status, achieved under the old regime, has collapsed. That's why voters made the revived Communist Party the leaders, with 22% of the parliamentary vote. Ultranationalist Vladimir Zhirinovsky's misnamed Liberal Democratic Party did better than predicted, coming in second.

It is certainly a disappointing outcome for Yeltsin and the whole reform camp. But it is not quite a disaster. Indeed, Yeltsin will even find some encouraging nuggets in the results as he ponders his strategy for the far more important June presidential elections. Yeltsin hasn't yet declared whether he will be a candidate in that crucial vote, which will choose a leader for a five-year term.

FALLING FLAT. As he mulls his options, the Russian President will note with satisfaction that the parliamentary elections have not produced a charismatic challenger for the presidency. Grigory Yavlinski, the only reformer with much popularity, gained just 9% of the votes. Yeltsin's most feared rival, Alexander Lebed, the nationalist former general, fell flat on his face. His party received less than the 5% minimum for parliamentary representation.

While Yeltsin will face a strong campaign from the resurgent Communists, their leader, Gennady Zyuganov, is a bumbling-professor type who lacks charisma. Says Nikolai Petrov, a senior analyst at the Carnegie Endowment for International Peace in Moscow: "This does improve Yeltsin's chances. There's danger from the Communists and nationalists, but he'll get a chance to mobilize the democratic electorate."

The big question is Yeltsin's health. If he is able to run in June, he will likely enjoy the heavy backing of the financial and business groups his policies have enriched as well as the old military and industrial elite. But if he takes himself out of the race, the reformers could split--opening the way for Zyuganov or Zhirinovsky.

There is also concern that the Communist resurgence may frighten Yeltsin into abandoning his relatively austere economic program. Such a move could be self-defeating if inflation, which he has chopped from 2,000% in 1992 to around 170% for 1995, shoots up again.

But Yeltsin should be able to hold the line on reform. Although the Communists are likely to pick up at least 150 of the Duma's 450 seats and Zhirinovsky did surprisingly well, with more than 50 members, the President's powers are much greater than those of the Duma. Moreover, any Communist effort to roll back reform will be hurt by the poor showing of their allies, the Agrarians, a group led by collective farm managers, who dread privatization of agriculture. They only won about 20 seats. Finally, the Communists and Zhirinovsky disagree on economics. The otherwise erratic Zhirinovsky tends to support sound fiscal policies.

Yeltsin is not acting as if he's going to cave in to his rivals. Moscow insiders say he will likely ditch unpopular Foreign Minister Andrey V. Kozyrev. But key aides such as Prime Minister Viktor S. Chernomyrdin and privatization chief Anatoly Chubais are likely to stay on.

If Yeltsin can hang on until June, he may be helped by real economic improvement. With inflation down and the ruble relatively stable, the indications are that economic output is likely to rise in 1996 for the first time in six years. Russians are no longer seeing their savings eaten away to the degree they were two years ago. By June, they may see more Russian goods on the shelves and perhaps more competitive pricing. While such changes may not win the votes of big losers such as Maria Artshenava, they could be enough to gain Yeltsin another five years.By Peter Galuszka in Moscow


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