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Russians Assure Clinton They'll Pursue Reforms

Summit: Yeltsin, acting premier stress commitment to free markets, democracy. Crisis undermines pledges.

September 02, 1998|ELIZABETH SHOGREN and TYLER MARSHALL | TIMES STAFF WRITERS

MOSCOW — In one-on-one meetings with President Clinton on Tuesday, Russian President Boris N. Yeltsin and acting Prime Minister Viktor S. Chernomyrdin pledged that their country's current fiscal and political crises will not weaken their commitment to democratic and free-market reforms.

However, the Russian leaders' political vulnerability raised questions about their ability to make good on their promises. Attuned to Russia's current political turmoil, Clinton directed the main message of his visit to a broader audience.

During a 35-minute pep talk to a large gathering of intellectuals and students, Clinton tried to boost the morale of the Russian people but never mentioned Chernomyrdin and uttered Yeltsin's name only in a glancing reference.

"I have to tell you that I do not believe there are any painless solutions, and indeed, an attempt to avoid difficult solutions may only prolong and worsen the present challenges," Clinton said in a speech at the Moscow State Institute of International Relations.

On the first day of a two-day summit in Moscow, U.S. officials also announced an agreement to share early warning data on missile launches worldwide with their Russian counterparts. But because of the depth of Russia's current fiscal crisis--and the fact that it has helped send stocks plummeting on Wall Street--an arms control development that under other circumstances would have been heralded as significant was barely a footnote.

In an apparent effort to calm jittery investors worldwide, officials from both countries stressed Russia's continued commitment to economic progress. But given the resistance to both Yeltsin and Chernomyrdin in the Communist-dominated Duma--the Russian parliament's lower house, which has already rejected Chernomyrdin's nomination as prime minister once and is demanding that Yeltsin surrender to it a greater share of political power--there was no guarantee that the Russian leaders have the power to back up their rhetoric with action.

"The country will continue building a market economy and a democratic society," the Kremlin press service quoted Yeltsin as saying to Clinton. "It is quite natural that in light of a specific situation, tactical changes may be made in this course, in particular by increasing the role of the state in the economy. But there will be no retreat in reforms."

Russian officials had no explanation of what Yeltsin meant by tactical changes and an increased state role. Analysts could guess only that he might have been referring to nationalizing some of the private banks that have collapsed in recent weeks or possibly taking more control in general of the banking system.

U.S. officials who sat in on a working lunch with the two presidents insisted that the comments did not signal a return to measures that marked the Soviet-era command economy, such as price controls or a ban on the use of foreign currency by Russians.

"They indicated a number of areas in which they felt more active state involvement was appropriate," said Deputy Treasury Secretary Lawrence Summers. One example he offered was more effective collection of taxes, a goal supported by U.S. officials. "It certainly would not mean a going backward toward communism."

At the Kremlin lunch, attended by only a handful of Russian and U.S. officials, Chernomyrdin declared his determination to take "radical steps" to reform the inefficient and inequitable tax system, including decreasing a tax on profits and sorting out the collection of taxes, Yeltsin spokesman Sergei V. Yastrzhembsky said.

Although the meetings between Clinton, Yeltsin and their teams focused primarily on Russia's economic troubles, U.S. officials came with no new financial rescue package and were able to offer little detailed advice because of the fluid state of the Russian government.

Yeltsin fired his prime minister and Cabinet on Aug. 23. Although he quickly reappointed Chernomyrdin, who had been prime minister for five years until Yeltsin fired him in March, the rest of the team has yet to be named.

The Duma rejected Chernomyrdin's nomination Monday. Yeltsin has resubmitted Chernomyrdin's name to the lower house, and can do so a third time if it again rejects his candidate.

U.S. officials refrained from assessing Chernomyrdin's chances and stressed that they were determined to stay out of domestic politics in Russia.

But Clinton was met at the airport Tuesday morning by Chernomyrdin, and the two had an intense, 35-minute discussion on the way to Clinton's hotel about U.S. prescriptions for the Russian economy.

U.S. officials also sought to defuse the periodic rumors about Yeltsin's poor health and shaky mental state that have recently resurfaced.

During a 90-minute one-on-one meeting in the Kremlin late in the morning with Clinton, and throughout the working lunch, Yeltsin was "vigorous, very much engaged, very much on top of the extremely difficult situation that he is trying to deal with," Deputy Secretary of State Strobe Talbott said.

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