By Going to the People, Yeltsin Gets Mad--and Even--With His Old-Guard Foes : Russia: Although it may appear he is retreating, the president, through his reforms, has made it extremely difficult to return to the past.

President Boris N. Yeltsin’s failure to persuade the Congress of People’s Deputies to approve his prime minister, coupled with a number of concessions he has made to hard- line opponents, have been interpret ed by many a Western pundit as sure signs that his presidency and economic reform are doomed. Russia’s brief experiment with democracy has flopped, the pessimists assert, and authoritarianism, or worse, is just around the corner.

As before, any political obituaries for Yeltsin are highly premature. The Russian president has now struck back with a call for a national referendum on his governance and has put his opponents on notice that he will not hesitate to take his case directly to the people. Yeltsin’s opponents know well the degree of popularity he enjoys and have tried to prevent him from holding a referendum and scheduling new elections. So it may well be that, in retrospect, the hard-liners’ apparent victory could turn out to have been their last hurrah. This is so, because, despite enormous difficulties, strenuous opposition and numerous mistakes and miscalculations, Yeltsin, his rebuffed prime minister, Yegor T. Gaidar, and their associates have created new political and socioeconomic realities that make a return to the past unlikely.

Perhaps nothing more illustrates the changing political realities than comparing Yeltsin’s current opposition with previous conservative campaigns to derail reform. In a December, 1990, meeting at the Kremlin, for example, thousands of Communist Party stalwarts and functionaries of the military-industrial complex, outraged by Mikhail S. Gorbachev’s rather timid reform efforts, shouted down the president, issued a series of ultimatums and demanded that power be transferred to a “National Salvation Committee.” Chastened by the meeting, Gorbachev promptly veered away from real reform. This did not prevent the leader of the group, Alexander I. Tizyakov, to start organizing the failed August, 1991, coup that eventually landed Yeltsin in power and himself in jail.

Many of Yeltsin’s current foes represent essentially the same groups and, as previously, wish to stop or slow down radical reform. But, today, they must pay lip service to the market economy and are no longer strongly committed to socialism. This is especially true of many powerful industry captains, who have managed, in effect, to privatize their enterprises, or hope to do so shortly, and who see their personal interests better served by a liberal economic system. Others simply enjoy their newly gained managerial freedom from the straitjacket of the command economy and are loath to give it up.

This explains why in a legislative body dominated by die-hard communists and opponents of radical reform, as is the Congress of People’s Deputies, Yeltsin can still chalk up significant successes. Even as Gaidar was going down to defeat, the Russian president scored a much more significant, if little noticed, victory: Deputies passed a constitutional amendment making it legal, for the first time since 1917, for Russian citizens and corporations to buy, own and sell land and natural resources.

There are other important trends working in favor of the reformers, though they often remain obscured by the focus on economic hardships and political conflict that dominates Western reporting from Russia. The radical price liberalization instituted in January, 1992, has dealt a severe blow to endemic shortages, without triggering the widely feared social explosions and hunger. Just as significantly for the long term, Yeltsin has taken decisive steps toward demilitarizing the Russian economy by slicing military spending. This year, military procurements are 70% off last year’s levels, which alone accounts for a large chunk of the industrial-production decline bemoaned by conservatives.

Considerable progress has also been made in privatization. An astounding program of privatizing industrial enterprises, through vouchers distributed to the population, is picking up steam to the surprise of many. Just a month after its inception, 6,000 large concerns, with 15 million workers, had submitted applications. The transfer of small-scale businesses to private entrepreneurs is progressing even faster. Between 30% and 50% of the shops and services in Moscow and St. Petersburg had already been privatized in the first six months of the year; 350,000 apartments in Moscow and 85% of the restaurants in Nizhni Novgorod have similarly found private owners. At this rate, most of the retail trade and much of the housing in Russia will be privately owned in a year or two.

The political implications of these trends are clear. The armies of new owners are forever lost politically to opponents of the market and are natural allies of Yeltsin and the reformers. It is no wonder, then, that while 40% of the deputies would reinstate socialism, according to recent polls, only 4% of the Russians want Arkady Volsky, the leader of the most powerful opposition group, Civic Union, to be their prime minister.

This is not to say that Yeltsin and reform are out of the political woods, yet. Russia’s state is far from salutary. Serious economic problems--a huge budget deficit, the collapse of the ruble and galloping inflation--remain unsolved and threaten reform. Rampant corruption, spreading crime and centrifugal tendencies in the provinces add elements of instability, as does the continuing ethnic turmoil in Russia and beyond its borders.

Still, this “least likely to succeed” former heartland of the “evil empire” compares favorably to many of the former republics, currently marked by senseless violence or neo-communist policies couched in nationalist rhetoric. Much of the credit should go to Yeltsin and his band of dedicated reformers.

So far, the West has hardly distinguished itself in providing help. Western governments have talked a good line, but have done little. Most of the aid promised with great fanfare has yet to materialize. International financial organizations, such as the International Monetary Fund, are often unnecessarily dogmatic in their conditions for assistance, while Western nations, and especially the European Community, impose sky-high barriers to the only goods the Russians and Eastern Europeans can produce competitively. Commercial banks that once fell over each other in their zeal to extend unsecured loans to the Brezhnev regime, on the mistaken assumption that totalitarians always pay their bills, are now dragging their feet in providing debt relief to the democrats. This despite the fact that Russia has taken upon itself the repayment of the entire Soviet debt. These are myopic policies.

The decisive battle that will decide the fate of reform and democracy in Russia has now been joined. On one side of the barricade is the first democratically elected Russian leader and the future of the country; facing them are the remnants of the past. For the Russian people and the West much rides on a victory for the future.