Gorbachev Feels Heat on Economy

FROM the grimy coal pits of Russia and the Ukraine, Soviet miners are sending President Mikhail Gorbachev an unpleasant message. "The president does not represent the interests of the people," Victor Yakovlev, a miner from Vorkuta and a member of the Russian parliament declares. "He has to resign."

This demand was issued at a press conference Tuesday announcing the formation of a national committee to lead a strike movement that has been growing slowly since the beginning of March. Coming two days after the nationwide referendum, the miners were serving notice that Mr. Gorbachev may have won a solid majority for the preservation of the Soviet Union, but he did not gain a popular mandate.

In part, Gorbachev's problems have been complicated by his failure to win an overwhelming victory at the polls. Though officials claim a 77 percent "yes" vote for preservation of the union, this figure is inflated by the 90 percent-plus majorities racked up in the conservative Communist-ruled Central Asian republics.

In the politically more crucial areas of the Ukraine, the major Russian cities, and the industrial regions of the Urals, as much as half the population voted "no" in a clear antigovernment protest. And Gorbachev's archrival, Russian Republic leader Boris Yeltsin, appeared to have won resounding backing for his proposal to create a Russian presidency, for which he is more than ready to run.

But the prospects for trouble come less from Mr. Yeltsin than from the economic collapse. Indeed, Gorbachev adviser Grigory Revenko laid blame for the "no" vote in cities such as Moscow, Leningrad, and Sverdlovsk on the empty store shelves there. Long lines of people are hardly limited to those cities, however, though conditions may be worse there than elsewhere.

Gorbachev laid out that reality in a speech to a meeting of economists last weekend. Industrial production is down 4.5 percent already this year, meat production by 13 percent. And production of oil for export, the main currency earner, is down from 125 million to 60 million tons.

And now Gorbachev's backing will face an even more severe test in the form of a long-awaited across-the-board hike in retail prices, which was decreed on Tuesday night, to begin on April 2. Prices are due to rise an average of 60 percent, but some will double or triple. The government promises to use part of the new revenue for compensation measures starting this week, including wage increases, but these will not cover the full amount.

The price reform is a key element of broader reforms, ending the government-subsidized gap between low prices and far higher costs of production. In theory, as prices are freed, it can lead to fuller store shelves. But many economists say without other reforms such as privatization, including land, the state-run economy is unable to respond to the price reform.

IN the short-term, many goods absent for months may suddenly appear because they have been hoarded by distributors and enterprises awaiting the price hikes. But most observers expect this to be a short-lived phenomenon.

"The reform won't rid us of shortages," wrote the trade union daily Trud yesterday, "because there won't be more production. Thus the price reform won't resolve our sharpest economic problem. On the contrary there is a threat of hyperinflation."

All of this sets the stage for a wave of industrial strikes, led by the miners. Two years ago the miners went on an unprecedented strike seeking higher wages, better working conditions, and a better price for their coal. After what the miners describe as two years of broken promises, their demands have become political as well as economic. The government has refused to respond to what it calls diktat, but now the strike has grown to include 280,000 miners in 165 mines, the strike leaders say.

After the referendum, there are signs that Gorbachev intends to take a softer and more reformist tack than he has in recent months. "The referendum lays the foundation for further democratic reforms in this country," Gorbachev adviser Revenko told reporters Tuesday. He placed long-delayed economic reform measures, such as privatization of small business and land ownership, at the top of the list.

The Gorbachev aide also talked about moving rapidly to conclude the draft union treaty. He took a more conciliatory tone toward Yeltsin and other republican leaders, calling for "calm" and cooperation in solving economic troubles. But for some, including the embittered miners, such talk comes far too late.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK