Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Reds Will Beat 'DyingRegime,' Says Aslund

A leading Western economist and former adviser to the government described the Yeltsin administration on Friday as "a dying regime" intent solely on grabbing power and property and destined to lose the presidential elections to its communist foes.

But Anders ?slund, a senior associate with the Carnegie Endowment for International Peace, tempered his views with a belief that Russia's economic and political institutions are strong enough to keep the country's fiscal house in order until a changing of the guard.

?slund, in a briefing with the press, said the biggest question is whether the Communists -- whom he predicted would win the elections by a landslide -- can develop a realistic economic vision.

The status of Russia's economic reforms has come under increased scrutiny of late as Yeltsin, challenged by a strong Communist showing in December's parliamentary elections, tries to whip up populist sup down a path toward renewed high inflation in an effort to appease voters and win re-election.

However, ?slund painted a picture of an administration largely under the direction of Major General Alexander Korzhakov and First Deputy Prime Minister Oleg Soskovets, both of whom are trying to consolidate their power rather than pursue an electoral strategy.

"What worries me now is very much President Yeltsin's response to the electorate, which really doesn't make any sense," he said. "It's a strategy for grabbing more property and power in the system, and not dealing with the crucial issue, which is corruption."

However, despite concerns among foreign governments and lenders that economic reforms could do an about-face, ?slund said the country's institutions -- including both houses of parliament and the independent-minded regions -- were strong enough to resist change.

A thin bond market and foreign interest in Russia's securities market will also help to maintain stability, ?slund said, adding that low but stable stock prices and a plethora of investment houses setting up shop in Moscow are proof of foreign confidence in the economy. But his greatest praise was directed toward Central Bank Chairman Sergei Dubinin and bank deputy head Sergei Alexashenko, who are likely to come under pressure to increase spending and allow the government to tap the bank's $12 billion in hard currency reserves.

"The question is, how much can they take?" he said. "And my guess is that Sergei Dubinin and Sasha Alexashenko can take a lot."

?slund also pointed to a $9 billion, three-year loan under negotiation from the International Monetary Fund which, together with future entry into the World Trade Organization, would serve as yet another institutional guarantee that Russia will stay the course.

The fund would provide for macroeconomic reforms as well as sectorial reforms in areas such as banking or land reform. Presumably, the money would be distributed in installments which could be cut off should Russia stray from tight fiscal policies.

An IMF official told Reuters on Friday that an agreement was pending in the next two weeks. The fund's managing director, Michel Camdessus, will probably visit sometime around Feb. 21, he said.

Negotiators have yet to settle the issue of oil export tariffs, which the IMF wants Russia to replace with an excise tax on all oil sales, the source said.

As for the economy under a communist president, ?slund said there were many unknown factors, of which the largest was who would establish the party's economic agenda.

One possible scenario entails Gregory Yavlinsky's Yabloko Party -- which ?slund described as a social democratic party -- working with the communists after the elections. Yabloko would bring to a coalition international respect, a majority in parliament and economists, ?slund said.

"Will the economists understand at all what the economy is about?" he said, adding that there is not a single economist under 50 years of age working with the Communist party. "It's not that they will [damage the economy] out of malicious intention. ... They simply will not understand."