Judge Russia by Reality, Not by Its Radicals : Policy: The move toward reform is holding steady despite the rhetoric.

Americans, absorbed in their own politics for the last six months, may be alarmed by the latest news reports from Moscow. However, the course of events in the former Soviet Union is far more orderly and even more hopeful than it seems.

No one of importance in Moscow is trying to overthrow Boris Yeltsin. He is not an American President with his own Cabinet, but more like a French president, with a prime minister in charge of the cabinet. And change in the cabinet is the focus of the current struggle in the Congress of People’s Deputies.

The real issue is not whether to reverse reform, but whether to follow the verbal policy of the past year or the real policy. The top economics official, Yegor Gaidar, has spoken of a tight money policy, with a sharp reduction of governmental deficits and subsidies. The real policy was to subsidize industry to try to prevent unemployment. The deficit was simply moved off-budget through “loans.” Very little privatization or agricultural reform has occurred this year--or was scheduled.

Perhaps Gaidar sincerely wanted the policy he proclaimed. Perhaps it was all pretty words to get loans from the International Monetary Fund. Yet Yeltsin must have supported--even required--the real policy of industrial subsidies this year. After all, he is from the industrial center of the Urals, industrial workers were his main base of support, and he always had a highly populist economic policy before 1992.

The opposition to Gaidar’s verbal policy has been Arkady Volsky, the head of the Union of Industrialists and Entrepreneurs, who has formed a coalition representing industrialists, workers and the army to prevent the destruction of industry. Volsky wants to retain Yeltsin as president, and his policy is much closer to Yeltsin’s than Gaidar’s.

Volsky describes his policy as the adoption of the Chinese economic model. This means a strong and subsidized state industrial sector, but also radical reform in agriculture and the service sector, foreign investment and a vigorous export strategy. It focuses--as Gaidar’s policy has not--on the encouragement of saving and investment to control inflation. Given the nature of real policy this year, the adoption of the Chinese model would be an acceleration of reform, not a retreat.

Volsky is also pushing the creation of a strong confederation. In a very real sense, the Soviet Union still largely exists. The Soviet army is still intact, and most large enterprises outside Russia remain part of “holding companies” or “concerns” located in Moscow. Russia has been subsidizing industry in most non-Russian republics.

This policy will become more formalized, and the former Soviet Union will soon look like the Western Europe we hope to see in 15 to 20 years. It would have a common market protected by high tariff walls, a common army and gradually develop political institutions to control them.

As Russia moves away from the language of radical reform and toward the language of a strong confederation, the Clinton Administration will be under strong domestic pressure to react negatively in the name of democratization.

This would be a major mistake. It is radical economic reform such as Gen. Augusto Pinochet conducted in Chile that requires a dictatorial political system. Gradual policies emphasizing social welfare are easier to combine with democracy, and Volsky has the support of a majority of the freely elected Parliament.

A peaceful confederation of ethnically diverse states such as in Western Europe is far superior to the bloodshed of Yugoslavia, Liberia, India and countless other countries. The majority of non-Russians also are beginning to understand this. The former communist leader, Algirdas Brazauskas, has just won a free election in Lithuania. His Democratic Labor Party won at least 79 seats of 141 compared with 35 for Sajudis, the independence party. Brazauskas’ platform was gradual economic reform and better relations with Russia.

The former Soviet Union wants to become part of the Western alliance, and we should welcome it with open arms. American radical conservatives have been defining what we should support in the former Soviet Union. The new Democratic Administration should reject this and press ahead with the deepest American values--pragmatism, social welfare, ethnic reconciliation and the rights of the individual against the tyranny of the majority.