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. Last Updated: 07/27/2016

Gaidar Defends Policies

Acting Prime Minister Yegor Gaidar, defying political pressure to find common ground with his opponents at the Congress of People's Deputies, on Wednesday gave legislators an uncompromising defense of his economic policies.

In rapid-fire style, Gaidar hammered away at his main message: that the government's only choice was to stay with the tight financial policy that his enemies say is destroying the economy.

Room to maneuver, he said, was limited by the country's lack of hard currency and other reserves, a "deformed economic structure" and, most of all, "dangerously high inflation".

"We stand on a very narrow path and we will get out of the crisis only if we move along this path", he said. "Prices are rising by 25 percent a month", he said. "We are very close to 50 percent which is, technically speaking, hyperinflation".

The speech, while demonstrating Gaidar's resolve to forge ahead with his policies, may also cost him his job. The 1, 040-member Congress, Russia's highest legislature, is expected to vote on Gaidar's performance this week.

If legislators approve Gaidar's report on the economy, he will have a mandate to continue as head of the government. If they vote disapproval, then President Boris Yeltsin will be forced to name a new candidate for the job.

As Gaidar spoke, he was intermittently interrupted by jeering from the hall. But he appeared to be less concerned with scoring political points with legislators than making his point that the majority of Russians were behind his reforms.

"The people clearly understand the need for reform and are ready to work, rather than rock the boat of our well-being and future", Gaidar said. As proof, he said that the amount of working time lost due to strikes was six times lower than in 1991.

"It is becoming more difficult to convince people to go on strikes and demonstrations", he said, summoning a round of catcalls.

The discontent from the hall reflected the political struggle being fought at the Congress. At stake is who names and controls the government - the president or the legislature. This in turn determines who sets the country's path of reforms.

On Tuesday, as the Congress session opened, Yeltsin set out a five-point plan that would leave him in charge of naming the government. The parliament speaker, Ruslan Khasbulatov, responded with a blistering attack on the Gaidar team.

Gaidar was undaunted by the speaker's attack. He said his government's main achievement had been preserving social order while launching the first, most difficult stage of reforms.

"There was talk of cold and hunger, the stoppage of transport and the breakup of society", he said. "Despite all the talk about massive discontent over reforms, we managed to preserve social stability".

Gaidar admitted that the government had moved slowly in implementing reforms, but he placed much of the blame on the legislators.

He accused the Supreme Soviet, Russia's 247-member working parliament, of adding to inflation by approving huge budgetary increases for social security and credits for agriculture and industry.

Speaking later, Vice President Alexander Rutskoi replied that Gaidar's team had led the country into crisis with its economic shock therapy, and demanded a more interventionist role for the state.

"We cannot abandon regulation and management", Rutskoi, a leader of the centrist Civic Union bloc, told the Congress. "The essence of the transitional period demands that".

The Congress is Gaidar's greatest political test since he began reforms by freeing prices in January. He needs clear authority from the Congress to move ahead with his campaign to privatize major Russian industry, and to lead his reforms through the winter.

Yeltsin has been seeking a compromise with Civic Union to assure support for Gaidar and his program.

But Gaidar's speech on Wednesday made no mention of this or any other concessions, while Civic Union leaders kept up their demands.

This left the president's team uncertain over the success of Yeltsin's overtures to Civic Union, which controls roughly 350 of the 1, 040 votes. Unconditional supporters of the president number less than 200 deputies at the Congress, while the hardline Russian Unity bloc controls about 350 votes.

"It's a shame, but I think deputies are politically against Gaidar's candidacy", said First Deputy Vladimir Shumeiko. "He needs 521 votes, and after two days of the Congress, it looks like he won't get them".

Despite speculation that Yeltsin might have an alternative proposal for prime minister in the wings, Shumeiko said there was "only one candidate" and that if Gaidar had to go, he too would leave.

Civic Union representatives also said they thought Gaidar lacked the votes to stay.

Gaidar's speech "had nothing of the agreement with Civic Union in it", legislator Igor Polozkov said. He and other Civic Union legislators said that they would support a Gaidar government only if it made good on promises to add Civic Union's "correctives" to its economic plans.

Sergei Baburin of Russian Unity expressed surprise at the uncompromising tone of Gaidar's speech.

"Either the speech was a mistake, or it was a premeditated move and Gaidar will soon be gone", he said.