Behind Russian Rhetoric, a Deal in the Works

Market reformers compromise with centrist industrialist union to build support in parliament and stave off hard-line threat

THE rhetoric is rising as Russia approaches yet another moment of political confrontation between supporters and opponents of the government's reform policies when the country's supreme legislature convenes Dec. 1.

But behind the bombast, a deal is cooking. A political compromise is being negotiated between representatives of the government of reform architect and Acting Premier Yegor Gaidar and of the centrist bloc led by Arkady Volsky, head of the Russian Union of Industrialists and Entrepreneurs. The Union is the key part of the centrist Civic Union, an alliance of four parties which claims to represent 40 to 50 percent of the deputies in the Congress.

According to Mr. Volsky's deputy, Alexander Vladislavlev, the negotiating group began its meetings Wednesday with the aim of defining a joint economic program. The new policy would modify the government's current strategy to accommodate the proposals of the Union, which seeks an easing of tight money, austerity policies, and greater support for state-run industry, he says. Differences still exist, the industrial lobby official explains, but none that cannot be resolved.

The industrialists also seek changes in the composition of the Gaidar Cabinet. "Everywhere a new policy is in need of new people," Mr. Vladislavlev says.

The key moment in this search for a compromise will come Nov. 26, when Mr. Gaidar is scheduled to address the Supreme Soviet, the standing parliament, on industrial policy, the Union leader explains. "If Gaidar appears as a politician, not as a professor of economics, and if he proposes real corrections of the reform, and proposes new people for a new program, the Congress is finished," Vladislavlev says. "That is the real solution."

Russian President Boris Yeltsin met two weeks ago with Civic Union leaders, a meeting that by most accounts went well. But afterward the president's temper flared at reports in the press that the Civic Union had presented him with a list of new Cabinet members. Subsequently, Mr. Yeltsin indicated that while changes would be made, he did not want to appear to have bowed before someone's demand.

Vladislavlev says that personnel changes in the government were privately discussed with Yeltsin and subsequently with Gaidar. He refused to talk in detail but indicated that at least one of the people whom both the Union and Gaidar agree will be replaced is Minister of the Economy Andrei Nechayev. Minister for Foreign Trade Pyotr Aven is also considered high on the endangered list.

The clearest sign of a compromise came last Saturday when Yeltsin addressed the convention of the Union of Industrialists and Entrepreneurs. Yeltsin vigorously defended his reform policies, while indicating a readiness to respond to some of the enterprise managers' needs. Tax breaks, selective credits to certain industries, and protection from foreign competition were among Yeltsin's offers.

The Russian leader, however, specifically ruled out more of the huge subsidies which the Russian Central Bank unleashed this summer. Gaidar has insisted that the government and the Bank return to tight money policies to slow skyrocketing inflation, now estimated at 2,000 percent for 1992. Earlier this week, Central Bank chairman Viktor Gerashchenko, an often harsh critic of the reform policies, was made a member of the government, a move interpreted as both a gesture of compromise and an attempt to shift

the bank out from under parliamentary control. Vladislavlev outlines several changes the Union still seeks:

* Price controls on key commodities, especially oil.

* Short-term aid and long-term investment for "priority" industries, such as food production, energy, and transport.

* Slowing and modifying the privatization program to allow for experiments to find different models for privatization.

What is not acceptable, Yeltsin told the Union meeting, is "a slightly disguised desire" to restore the system of state purchases from enterprises, a wage-price freeze or any return to a command economy.

The managers are hardly looking to go back to the old order, Vladislavlev argues; rather, they zealously want to defend their independence from the old system of ministerial control.

"The only people who can defend radical economic reforms are the directors of state enterprises," Vladislavlev insists. "They will never give their freedom back and only they can defend it because they have the people behind them."

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