SPECIAL REPORT	JANUARY 19, 1998 VOL. 151 NO. 3
	Better Luck Next Year It's business as usual in Russia, with Yeltsin ailing and the government struggling to pay its workers By PAUL QUINN-JUDGE /MOSCOW ussia would dearly like to be a normal country with normal news--the adventures of the Prime Minister's cat, for example, or a debate over the length of the work week. Not the commander of the Pacific Fleet selling off warships and pocketing the proceeds, billionaire businessmen buying up newspapers and TV stations the better to smear their rivals, or doctors on hunger strike because they have not been paid for six months. But normalcy will not break out in 1998. Economic reformers claim to see the first faint signs of growth after years of contraction. But political uncertainty--the nemesis of economic development in general and foreign investment in particular--will continue amid growing doubts about Boris Yeltsin's physical health and mental acuity. And most of the problems that the government had planned to solve in the "breakthrough" year of 1997 are still around as the new year begins. Last year the treasury was to have raised enough money to pay salaries regularly, monopolies were to be broken up and corruption curbed. The young, dynamic economic reformers who came into government in March were to end the cycle of political and economic stagnation caused by the President's long illness and the ineptitude of the team he had left to run the country. But none of that has happened. What did happen can best be summed up in one of the most famous of Prime Minister Victor Chernomyrdin's many clumsy utterances: "We were striving for the best, but it turned out as usual." By the end of 1997 the young reformers were on the retreat. Chernomyrdin himself, who has presided over five years of stagnation, was back in full charge of the government. The President was ill. And in a poll of foreign chief executive officers Russia finally beat out its longtime rival Nigeria as the world's most corrupt country. Political uncertainty will continue on at least two fronts in 1998. The team of young technocrats who were supposed to force through drastic economic change has been dispersed. As a result, though the government is officially committed to reform, nobody quite knows what this means. The technocrats' godfather, Anatoli Chubais, is hanging on to political power by his fingertips, and his rivals are doing their best to split his alliance with the other young First Deputy Prime Minister, Boris Nemtsov. Chubais says privately he has "just about" had enough of government and the expectation is that he will resign or be fired before long. The greatest source of uncertainty will again be Yeltsin's health. Perhaps the grimmest omen of things to come is the fact that Yeltsin ended 1997 the way he began it--in a sanatorium, with aides assuring the world that he was just fine. Yeltsin's health crises trigger a now-familiar pattern of events: any forward movement in economic change stops, and politicians start maneuvering with the succession in mind. The stock market also gets nervous--it dropped 5% the day in December the Kremlin announced the President had a cold. Each new illness seems to slow Yeltsin down a little more: he never quite recovers his previous level of activity. If this decline continues, Russia may be faced with an unpleasant choice in 1998: early elections, or another year of economic and political stagnation. Even without a succession crisis, Russia faces a bumpy year. It is vulnerable to fluctuations on the world markets. At home it needs to prove to potential foreign investors that the robber-baron era of capitalism is over--a tough job, given the vicious infighting that is taking place in anticipation of the next major government sell-off in the energy sector. The government also has to achieve what for most countries is the most elementary of operations: collecting enough taxes to run the country, despite draconian laws. Because of this failure, services like health and education were only partially funded in 1997, while most state workers went through the year without a single paycheck on time. The government promises to try harder in 1998, but this is scarcely reassuring. Russia needs a healthy president, a united government and a consistent economic policy. Without these factors, it risks ending 1998 in the same shape that it began the year: a strangely lopsided country, with pockets of spectacular wealth in Moscow and a few other cities, but desperate poverty spread widely over its 11 time zones. And the dream of being a normal, European country will remain as distant as ever.
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