Free Fall

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Last Friday morning, Deputy Secretary of State Strobe Talbott had a tense, 20-minute session with Yeltsin at the Kremlin. Talbott, speaking in Russian, said, "We need to know what your intentions are and what you are going to do." An aide interjected, "Mr. President, Mr. Talbott wants to know if you plan to resign." In a conference call with Clinton and other top American foreign policy officials later, Talbott reported that Yeltsin slammed his fist onto the conference table and replied, "I intend to serve out my term!" That clinched the summit.

Probably the only thing worse than going through with the summit would have been canceling it. If Clinton had backed out, he would have allowed Moscow's growing anti-American forces to charge that Clinton first had pushed Yeltsin into failed reforms, and now was abandoning his faithful friend Boris.

The White House admitted Clinton would not be taking the wherewithal for a new bailout with him, but insisted there were other topics that needed to be discussed: the stalled START II treaty, terrorism, nonproliferation, Kosovo, Iraq. The trouble with those subjects is that positions on both sides are already fixed; they don't offer much for an upbeat communique. Perhaps the biggest achievement Clinton could hope for was to reassure Russians by his presence in Moscow that the U.S. and the West are still concerned about the country and still engaged with it. "Imagine us not going," says a Clinton aide. It would send the message that "Russia's most important foreign partner basically throws up its hands and says, 'You sort it out.'" Clinton was rewriting a speech he planned to deliver in Moscow in which he would stress again the reforms Russia must put in place. What Clinton hopes to hear, says the aide, is "that they get it, and that they'll talk about what they plan to do."

It is doubtful whether reform is even listed on the Russian agenda right now; its time may have passed. Yeltsin is a spent force and shows no sign that he understands what the problem is. Chernomyrdin and the people he brings in with him think the problem is too much reform, and they intend to reverse it. When the country was first breaking out of the Soviet system, its initial step was to free prices. Now, with the ruble devalued and inflation inevitable, the communists are calling for price controls, and Chernomyrdin is listening.

Privatization was the next great reform effort--getting the economy out of government direction and into private hands. Those hands proved, however, to belong to well-connected operators who bought state properties at bargain rates and stripped their assets, becoming in the process notorious oligarchs who own the big banks, newspapers, television and more. It wasn't real privatization at all but a set of sweetheart deals that made the bankers partners with their cronies in government, focusing on exports, imports, loans and currency speculation.