Yeltsin Sees Russia’s Economy Turning Corner

Russian President Boris N. Yeltsin celebrated his recovery from what he described as “the most difficult year in my life” with a proclamation Friday that his country is finally en route to the economic prosperity his people have hoped for since overthrowing communism.

In a radio address recapping the turbulent first year of his second term in the Kremlin, Yeltsin once again embraced the populist and reformist themes that inspired his fellow Russians to choose him as the first freely elected leader in Russian history.

The past year has seen the 66-year-old president stage a dramatic come-from-behind victory over resurgent Communists to win reelection. He also emerged from quintuple bypass surgery in November with a vigor and focus unseen since his early days as the post-Soviet standard-bearer for reform.

A day after the first anniversary of his victory in the presidential runoff, Yeltsin proclaimed the past year personally trying but politically triumphant.

“The downturn in the Russian economy has been stopped, and the mark when production can grow has been attained,” he told the Russian people ahead of his Monday departure for summer vacation.

Yeltsin was referring to just-released midyear economic performance statistics that suggest as much as a 1% increase in gross domestic product--the first upturn after six straight years of decline. The ruble, once subject to capricious devaluations, has also been stable for two years, and inflation has been tamed from quadruple digits to about 15%.

Still, Yeltsin acknowledged that the benefits of democracy and a market economy are failing to reach many Russians.

“It is good to be a president of a happy and prosperous country,” Yeltsin said. “But the burden of responsibility presses immensely when the living is hard and there are problems everywhere.”

Reform has caused a harsh stratification of Russian society, creating a small class of filthy rich mobsters and entrepreneurs, a struggling middle class dazed by rising prices and competition and an impoverished community of pensioners and state workers who make up as much as a third of the country’s 148 million population.

Yeltsin vowed late last year to eradicate the practice of delaying state pensions and wages to cover budget shortfalls, and as of the first of this month, all arrears to retirees were reported to have been paid.

But hundreds of thousands of teachers, soldiers, medical workers and other state employees are still due as much as six months’ wages, and Yeltsin vowed Friday to settle those debts within three months.

That vow, made before television cameras during a meeting with regional governors, startled even Yeltsin’s chief economic strategist, First Deputy Prime Minister Anatoly B. Chubais. “Three months is a very tough deadline, Boris Nikolayevich. We will not be able to meet it,” Chubais could be heard warning Yeltsin.

But the president persisted, suggesting he might turn to “external sources” for help in clearing the debt. A Kremlin statement issued later, however, denied that Yeltsin is considering foreign loans to pay the overdue wages.

The bills piled up last year when Yeltsin, in a heated battle with Communist Party leader Gennady A. Zyuganov for the presidency, borrowed heavily at high interest rates to keep money flowing to idle and bankrupt industries to avoid closures and vote-losing layoffs. Those short-term loans had to be paid back with interest, which Yeltsin got from the state coffers at the expense of pensioners and public employees.

Once he recovered from heart surgery, Yeltsin executed a Cabinet shake-up that elevated no-nonsense reformers to step up the economic transition. Two new first deputy prime ministers, Chubais and Boris Y. Nemtsov, have been in their posts less than four months but are credited with whipping government finances into shape.

The anniversary of Yeltsin’s reelection has also been the catalyst for Russian media analyses of his performance, and most have been positive, sharply contrasting the revitalized president with the ailing leader of last year who spent eight months in hospitals and rest homes.

“The first year of the second presidency . . . has become a truly fundamental year for the Russian state,” praised the daily Rossiyskaya Gazeta. “And this is only the beginning.”

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