Yeltsin Defies Foes, Creates Propaganda Agency : Russia: Controversial reformer is named to lead institution, which will oversee state-owned news media.

President Boris N. Yeltsin, bolstering his position against foes of free-market reform, created his own propaganda agency Saturday to oversee state-owned news media and named a controversial reformer to head it.

Yeltsin acted by decree five days after the conservative Supreme Soviet passed a law abolishing his power to form new agencies without its consent and a day after it adjourned for the year. Legal experts said the decree is valid because of a technicality: The law has not yet been published.

The decree set up a Russian Federal Information Center to ensure “the timely and broad dissemination of accurate and truthful information about the course of reform in Russia” and to “increase the role of the press, news agencies, television and radio in elucidating state policy.”

Its formation reflects a view among designers of the year-old reform program that their efforts to free prices, sell off state property and integrate this former Communist nation into the world economy are faltering in part because ordinary Russians don’t understand them.

But former Communists who dominate the Legislature denounced the decree, which subordinates the new agency to the president, as a step toward censorship that will provoke renewed bitter feuding when the Supreme Soviet convenes again Jan. 13 to discuss Russia’s 1993 budget.

“This is an outrageous, arrogant move,” said Nikolai A. Pavlov, a leader of the Russia Unity opposition bloc in the Legislature. “Let the president try to prove that the country needs this new institution. I bet anything that not half a kopeck will (be appropriated) to it.”

Equally surprising--and infuriating to Yeltsin’s opponents--was the rehabilitation of his former information minister, Mikhail Poltoranin, who will head the propaganda agency.

Just a month ago, Poltoranin resigned in a tactical move to protect Yeltsin’s government from defeat by the larger Parliament, the Congress of People’s Deputies, which met during the first two weeks of December.

Unappeased, the Congress forced Yeltsin to abandon his reformist acting prime minister, Yegor T. Gaidar, and elected Viktor S. Chernomyrdin, a conservative oil industry manager, in Gaidar’s place.

Saturday’s decree was part of an aggressive effort by Yeltsin to recover from that defeat and consolidate presidential power at the new prime minister’s expense.

It gave Poltoranin, 54, a rank equivalent to first deputy prime minister, bolstering pro-reform forces in the new Cabinet that Chernomyrdin heads. Those forces also include four young economists from Gaidar’s team, who were kept in the Cabinet last week at Yeltsin’s insistence, and a fifth reformer, Boris G. Fyodorov, brought in to oversee their work.

“This is a very important political decision,” Victor L. Sheinis, a pro-Yeltsin lawmaker, said of the decree. “It is a demonstration of force and determination to adhere to radical reform.”

But Russian journalists, even those sympathetic to reform, expressed puzzlement over the new agency, which some said sounded suspiciously like a Soviet “ministry of truth.”

“Why create a whole expensive ministry to propagandize the government’s policy if the best propaganda for the government is improving the taxpayers’ living standards?” asked Dmitry I. Makarov, a reporter for the weekly Argumenti i Facti. “This step will find little understanding and no support among journalists.”

Although censorship faded with the collapse of the Soviet Union a year ago, the government still controls the former Soviet television network Ostankino, Russian television, the national radio network, the Itar-Tass news agency and the Russian Information Agency.

A presidential spokesman, Anatoly Krasikov, denied that the new agency will exercise censorship over those media. It will only “coordinate and supervise” their coverage, he said.

The Information Ministry--run since last week’s Cabinet change by another outspoken reformer, Mikhail Fedotov--has until now taken charge of licensing and regulating privately owned news media as well as churning out propaganda. It is responsible to the prime minister.

Poltoranin, in an interview with Itar-Tass after his appointment, said the decree was meant to separate those two functions and step up the propaganda flow under Yeltsin’s direction.

“Sometimes neither viewers nor readers know about laws passed by the Legislature, presidential decrees and activities of the government,” he said.

That view echoed a judgment by Gaidar last week that his worst mistake in office was not explaining the reforms sufficiently to prepare Russians for the high inflation, bankruptcies and unemployment that lay on the road to capitalism and to persuade them that such sacrifices are worthwhile.

“Information backup is very important,” he said in an interview with the newspaper Trud. “We did not pay enough attention to this.”

Poltoranin also said that his agency will use the media to “explain” the work of the Supreme Soviet--a statement irritating to legislative leaders who regard themselves as an adversary power equal to the presidency.

A former journalist, Poltoranin has been a Yeltsin confidant since Yeltsin came to Moscow in the early days of perestroika in the mid-1980s. He was one of the few advisers to stick by his boss after Yeltsin was ousted from the Soviet leadership in 1987 and scorned by the Communist Establishment.

In the run-up to the latest Congress session, Poltoranin was a provocative critic of the conservative chairman of the Legislature, Ruslan I. Khasbulatov, accusing him and other foes of reform of trying to stage a “constitutional coup” against the president.

Poltoranin’s rehabilitation follows a pattern of Yeltsin retreats and advances. Bracing for battle against the Congress last April, the president dismissed several close aides to remove them from the firing line.

One of those aides, Sergei M. Shakhrai, was brought back into the Cabinet last week as deputy prime minister in charge of ethnic issues.

Sergei Loiko of The Times’ Moscow Bureau contributed to this report.