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Russians Ease Up On Reform Plan as Living Standards Fall

By Justin BurkeSpecial to The Christian Science Monitor / February 7, 1992



MOSCOW

THE Russian government is revising its drastic reform program in the face of mounting public opposition, promising to cut taxes and increase social welfare payments.

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But in trying to keep the people content, government officials admit they risk derailing reforms because of a lack of resources.

"The most important thing is not to let the correction of some details of the reform develop into the changing of the course itself," Russian Labor Minister Alexander Shokhin said at a news conference Wednesday.

To soften the impact of reforms, which sent prices skyrocketing in the last month, the government announced it would reduce the value added tax from 28 percent to 15 percent on some essential items. Meanwhile, those most vulnerable to price liberalization, such as pensioners and students, will see their benefits boosted, says Andrei Nechayev, deputy minister for finance and economics. Pensions will rise 200 rubles ($2) a month, to a monthly minimum of 550 rubles ($5.50).

The revisions may force the government to renege on either a pledge to control inflation, or to maintain a balanced budget during the first quarter of 1992 - perhaps both. Mr. Shokhin said the government already was running up a deficit in January, because the tax collection system was not functioning properly.

Mr. Nechayev says funds to implement the government's plans were not readily available, adding that the printing of money was a more likely option than increased deficit spending. "This brings considerable pressure" on the government, he says.

Western nations have said substantial foreign aid, which Russian officials consider essential to ensure the success of reforms, will not be forthcoming unless more is done to control the money supply.

Antiquated accounting methods make it difficult for the government to keep pace with reform, Shokhin said.

"We are still using old technology like the abacus, instead of the computer," he said, explaining why the government is able to recalculate pensions only once every three months.

The reform modifications come as patience in some segments of society seems near the breaking point. Moscow is bracing for several large rallies Sunday - one to support and another to oppose the government's policies.

Gen. Konstantin Kobets, an adviser to President Boris Yeltsin, said quick action to improve living conditions for military officers was needed to prevent a rebellion. "The alarm felt by officers over their future has reached its limits," he said Wednesday in an interview with the Nezavisimaya Gazeta newspaper. "If things are allowed to go further, uncontrollable processes could begin."

Economist Stanislav Shatalin, a leader of the Democratic Reform movement, warned of another coup attempt in the offing.

"A thorough, comprehensive, well-planned preparation for counterrevolution is under way in the country," Mr. Shatalin told the daily Izvestia Wednesday. An opinion survey published in Nezavisimaya Gazeta said 71 percent of officers questioned wanted to see the return of a unified, centralized state within the boundaries of the former Soviet Union. In addition, 79 percent said they were ready to "take matters into their own hands."

Meanwhile, conservative newspapers continue to detail the suffering of the general population. The former Communist Party daily Pravda, quoting a Moscow doctor, said Tuesday the caloric intake of an average Russian had fallen to 2,200 per day, far below the recommended minimum of 2,800. The State Committee for Statistics reported on Tuesday that stocks of beef and poultry will be sold out in 19 days.