A One-Time 'Showcase' of Reform Now Embarrasses Moscow

Alongside the battle over President Boris Yeltsin's choice of Sergei Kiryenko as Russia's new prime minister, the central government is facing a public relations fiasco over events in the young banker's hometown of Nizhny Novgorod.

The Volga River city and region of the same name is seeing scratches on its carefully manicured image of being in the vanguard of economic reform.

The debacle concerns another native son: Andrei Klimentyev. Reminiscent of Washington, D.C., Mayor Marion Barry with his criminal record and populist ways, Mr. Klimentyev, a local entrepreneur, won the city's mayoral race March 30 by edging out less dynamic candidates backed by the Kremlin.

By April 1, however, the election results were canceled and by April 2, Mr. Klimentyev was in jail, detained in connection with 1995 charges of making off with $2.5 million in federal monies that he was managing for a state-held shipbuilder. He'd already been found guilty on some of the allegations two years ago and served an 18-month sentence.

Most people here suspect an embarrassed Kremlin orchestrated the ouster. Although officials deny involvement in the matter, Mr. Yeltsin has fired his representative in the region and sent a top security aide to mop up. The aide claimed locals had been misled by Klimentyev, a claim that insulted and infuriated the electorate.

The rise of men as different as Mr. Kiryenko and Klimentyev underscores the complicated progress of economic reforms in Russia, which has enabled the few to amass wealth and influence. Klimentyev's victory here is a stunning reminder of how economic change, even when apparently successful, has bypassed the majority of Russians and left them angry at the current regime.

In addition, the situation raises fundamental questions about how well Russia's leaders understand democracy. "Democracy in Russia still isn't intentional. It's there when it suits the authorities," says Vladimir Ionov, a columnist with the independent weekly Birzha. "And when they don't like something, they just get rid of it."

The Klimentyev affair has roused this city of 1.5 million. On a recent icy morning, Svetlana Boikova waited in front of the courthouse with dozens of others to sign a petition demanding his release. A demonstration was due to begin shortly.

"How can we talk about reform when what the government has done smacks of dictatorship?" she says. A cook in a kindergarten who earns about $20 a month, Mrs. Boikova adds, "All this talk about Nizhny Novgorod being the cradle of reform is just hype."

Yet the region has undergone a startling transformation thanks in part to hype. Called Gorky in honor one of Soviet leader Josef Stalin's favorite writers, it was a closed military site during the Soviet era and the place where noted dissident Andrei Sakharov spent his years of internal exile.

After the fall of the Soviet Union in 1991, the state took back its historic name, and led by its young governor, Boris Nemtsov, now a deputy premier in the Yeltsin government, built a profoundly different reputation.

Mr. Nemtsov understood the value of the press, and lost no opportunity to advertise his region as being on the cutting edge of reform.

He pushed ahead with "firsts" in privatization of state holdings, from land sales to peasants to turning over small stores to their workers. He spoke English and successfully courted foreign investment in the region.

During the election, Klimentyev took a page from from Nemtsov's book. He campaigned tirelessly and caught the media's attention. He promised lower prices and fatter pensions, pointing to his own wealth - a casino and three stores - as a sign of what he could do for the people.

Klimentyev's Kremlin-backed rivals looked drab in comparison, boasting about the new trolleybuses the city had bought and seldom campaigning.

Nearly everyone here knew of Klimentyev's past, including a Soviet-era conviction on pornography charges. He did nothing to hide it, and few voters seemed to care.

It's not clear how the mayor-elect would have solved the region's problems, given the opportunity.

During the Soviet era, defense plants comprised about 80 percent of Nizhny Novgorod's economy. Now, the defense industry accounts for perhaps 10 percent. Enormous plants that once supported entire towns stand idle. Still, Klimentyev promised to resign if he didn't make a dent within 100 days.

It seems an outlandish pledge, but one that people in dire circumstances were willing to take a chance on.

"Everyone wants a miracle," says Andrei Chugunov, editor of the weekly Monitor, "and it's not going to happen."