In Shift, Yeltsin Throws Lifeline to Strapped Industry

Promising to shelter industries from the harsh competition of a free market, Russian President Boris N. Yeltsin issued a four-month “anti-crisis” plan Monday that will delay the transition to capitalism.

With the economy reeling as the harsh winter approaches, Yeltsin pledged to offer credits--and even outright subsidies--to factories on the verge of bankruptcy. Rather than letting inefficient enterprises shut down, or forcing them to adjust to market demands, he offered them new tax breaks and protectionist import tariffs.

By setting forth such a pro-industry program, Yeltsin came down, at least temporarily, on the side of factory managers, who are generally conservative and who fear that rapid reform will erode their power and throw their industries into chaos.

But the government did not indicate Monday how many credits it would dole out, leaving unanswered the question of whether Yeltsin was merely throwing a bone to the powerful industrialists or actually retrenching on his reform program.

Government adviser Alexei Ulyukayev insisted that “the anti-crisis program is rigorously consistent with the program of furthering economic reform and is not an alternative” to reform.

But at the same time, he admitted that the proposal “differs only in a very small way from the program set out by Civic Union,” an influential and conservative opposition bloc of industrialists that Yeltsin has assiduously courted. “Ours sets out the specific mechanisms to achieve the general principles (that everyone agrees on): It’s better to be rich and healthy than to be poor and sick,” Ulyukayev added.

Although the tenuous coalition between Yeltsin and the industrialists may give the president a leg up in his showdown with conservatives at a scheduled Dec. 1 parliamentary meeting, some top reformers expressed anger at the president’s apparent retreat from the fast-track economic changes he has long promoted.

Further, “uniting with the only rational, constructive opposition may not be very smart strategy,” Vladimir Mau, a chief adviser to Acting Prime Minister Yegor T. Gaidar, told the newspaper Izvestia.

If Yeltsin and the industrialists band together, they might also fall together, he reasoned, opening the door for “an opposition of a totally different nature” to take power.

Even as Yeltsin promised to offer more subsidies to Russian industries, another announcement Monday showed the limits of Moscow’s largess. Lashing out at Ukraine and other former Soviet republics that have abandoned the Russian ruble, Yeltsin said he would stop subsidizing oil, gas and other natural resources and would start demanding payment in convertible currency, such as U.S. dollars or German marks.

After months of circulating both rubles and its own almost-worthless interim bank notes known as coupons, Ukraine on Monday ushered in a new monetary system based entirely on the karbovanets, a currency that will soon be replaced by the grivna.

Ukraine’s flat rejection of the ruble bodes ill for the Commonwealth of Independent States, the loose coalition of former republics established after the Soviet Union collapsed. Only a few Central Asian republics--Kazakhstan, Uzbekistan and Kyrgyzstan--remain attached to the Russian ruble. The rest are determined to make their own way, even, it seems, if they have to forfeit the special economic zone and common trading market envisioned when the Commonwealth was set up.

Yeltsin did say that Russia is prepared to barter goods in exchange for resources. Moscow also extended massive credits to Ukraine just two weeks ago when oil supplies there fell dangerously low.