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A Post Yeltsin Power Struggle Could Rock The Economy


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A POST-YELTSIN POWER STRUGGLE COULD ROCK THE ECONOMY

Is Russian history repeating itself? In early 1923, the Kremlin announced that Bolshevik leader Vladimir Lenin was enjoying a hunting holiday at his country estate. Soon after, Lenin suffered his fourth stroke, which led to his death less than a year later and a vicious power struggle. Flash forward to 1996: A Russian news agency announced on Sept. 8 that President Boris Yeltsin "went out several times hunting while relaxing at the Russ resort." Two weeks later, his surgeon disclosed that Yeltsin had suffered a third heart attack in late June, just before his reelection on July 3.

Amid mounting concern about a coverup of Yeltsin's health problems, Russians and the outside world are already preparing for the post-Yeltsin era. At the very least, Russia faces several more months of uncertainty, as Yeltsin is not scheduled for bypass surgery until late November. Meanwhile, the country will largely be run by Prime Minister Viktor Chernomyrdin and Yeltsin's closest aide, Anatoly Chubais. Their objective is to hold off a new election, which would throw the country back into political limbo and stall decision-making on key issues such as NATO expansion. But if Yeltsin's condition doesn't improve after the operation, the power struggle to succeed him will pick up speed.

Chubais and Chernomyrdin are working hard at damage control. That's difficult given evidence surfacing that in late June they hid the true condition of Yeltsin's health. The Russian media, many believe, also deliberately downplayed Yeltsin's health problems. Some observers are even raising questions about the White House, which strongly backed Yeltsin's reelection. Vice-President Al Gore met with Yeltsin on July 16, just two weeks after the ballot. Gore pronounced Yeltsin fit, even as reporters traveling with Gore expressed shock at Yeltsin's frail condition.

The controversy over a possible coverup could undermine Russia's fledgling democracy. Nonetheless, the Russian constitution boosts chances that the country's political system will survive--even if Yeltsin does not. None of the politicians hoping to succeed Yeltsin is talking about resorting to violent methods, as hard-liners did in 1991 and 1993. Instead, they are setting up coalitions and seeking financial backers to prepare for a Presidential campaign. "The political struggle is on, but it will not lead to any tanks rolling," says Andrei Fadin, a journalist at Obshchaya Gazeta, a Moscow weekly. The constitution requires that an election be held within three months of the President's death or incapacitation.

The Russian economy might not be as resilient as the political system, however. Uncertainty is hiking the government's borrowing costs at a time when it desperately needs money. The stock market is also worried, slumping 8% on Sept. 23 and 24, after doctors said the President may be too ill for an operation, then recovering slightly after the news that the surgery would take place. With investors jittery, Russia's first post-Soviet Eurobond issue might be delayed or reduced to even less than the planned $300 million to $500 million.

If an election is necessary, it's possible that a new government could be led by a Communist or nationalist. The Communist Party-led opposition is demanding that Yeltsin step down, and their leader, Gennady Zyuganov, has declared himself ready to run. Still, Zyuganov's chances are slim unless there is an economic crisis or the anticommunist vote is split among other contenders. He knows that and may try to build a coalition with Chernomyrdin. So far, the Prime Minister has been loyal to Yeltsin.

Zyuganov's likely rivals are Chernomyrdin and Yeltsin's national security chief, Alexander Lebed. Something of a maverick, Lebed is thought to be a potential successor to Yeltsin. But most observers had hoped he would have a few years to gain experience and tone down his more radical views. Few expect Chubais to run because he lacks the populist touch to win an election in Russia. But his close links to banks would make him a key behind-the-scenes figure. Says Sergei Markov, an analyst at the Moscow Carnegie Center: "Chubais won't run himself, but he will wait and align himself to whichever candidate is most likely to win."

For now, big business and the political elite can live with Chernomyrdin and Chubais running the country as Yeltsin prepares for his operation. They also support Yeltsin's wish to go forward with surgery despite the risks. After backing him heavily in the July election, banks and industry seem to prefer an enfeebled President to a new election season.

Russian voters, too, are tired of elections and fearful of change. When the news broke about Yeltsin's June heart attack, there was little public outcry. But given Yeltsin's poor health, it looks as if voters may have to decide on a leader sooner than they would like--and prove that the young Russian democracy can outlive its first elected President.EDITED BY PAULA DWYER By Patricia Kranz in Moscow


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