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. Last Updated: 07/27/2016

Reformists Seize Their Chance

This is the time of molding the country's economy without substantial hindrance - a marvelous time, at least in theory, for the economic reformers. When Yegor Gaidar last week compared the start of his first term in office with the present, saying that in January 1992 he could start with a clean sheet whereas now he had to contend with entrenched political forces, he was only half right. To be sure, he had then the advantage of surprise and shock: but now he has the advantage of presidential rule.


The decrees have rolled out in great waves: each one concluding with the phrase, which must give great satisfaction to those who have for nearly two years had to wheedle and beg (and fail) to get their decisions past parliament, which reads: "This decree comes into force from the moment of its signing".


Merely to scrawl one's signature on a piece of paper and it is done is dizzying power: hopefully not too seductive for the holder(s) of the pen.


There is one power: The reason why it is supported by most other states in the world, especially the Group of Seven, is that it is assumed to be a pro-Western and a reforming power. There is of course no guarantee that it will remain so - not even the "guarantee", bound to be weak in a this still-forming civil society, of a countervailing force to that of the president which the parliament represented. However, some clue as to how the government sees its future is what it is seeking to do to the economy when it has absolute authority.


What it has liked to decree in this sphere - with no great fanfare - are some of the key, frustrated, goals of the reformers. In the first place, the decision of the Central Bank to come over to the government's side and the decisions to raise the discount rate to 180 percent and to stop all soft loans has meant that the government has, proclaimed that industry is now to face inflation without protection. The phoney war around the White House has prevented the screams of pain from being heard - and it is anyway a little early for the reality to bite - but, if the decree is obeyed, bite it will.


Further decrees have cut subsidies on grain and raised the bread price - the latter one of the great untouchables of the Soviet period, the kind of decision which caused riots in cities and brought down governments in Poland. The former was one of the great money sinks which the government could not dam because of the power of the agricultural lobby - a lobby so powerful that policy affecting it essentially was routed through channels outside of the cabinet.


Most recently, the president signed a decree shifting responsibility for paying social security from the main union bloc - the Federation of Independent Unions of Russia - to the government of Russia.


This is apparently a technical change but in reality, it is a piece of far-reaching social engineering, one which could rapidly reduce the unions to a shell. The payment of social security via union structures was the largest reason for them remaining in business: It made them part of a system of provision but reduced their organizational and militant roles.


In the society which the reformers wish to shape, unions have a place (presumably) but only as non-state, voluntary institutions. Though there was a formal mechanism of tripartite discussion between government, enterprise directors and unions, it never had more than a shadow existence, nor could have because the "social partners" were never sufficiently distinct - the governors paid for most of the enterprises, and the enterprise directors and the union bosses made common cause in lobbying the government for continuing subsidies.


Now, the unions sink or swim on their ability to attract and keep members: They are, in other words, to be market rather than state institutions. The gain in independence (and probably militancy) is likely to be balanced, for members as well as union bureaucrats, with a loss of security.


The shapers of post-Soviet Russia are undoubtedly liberals - believing in the efficacy of free prices, free producers and free unions. Their problem is that, for very many, the liberal freedoms are often experienced, at least initially, as a new tyranny. Yeltsin needs very badly to get popular legitimacy for his liberalism: without it, tyranny becomes inevitable.


John Lloyd is Moscow bureau chief of The Financial Times.