Russia Needs ‘Strategy for Upsurge,’ a Downbeat Yeltsin Says

Like the embodiment of a flagging revolution, a tired President Boris N. Yeltsin conceded in his state of the state address Tuesday that his vision of a prosperous new Russia remains a glimmer on the horizon and that his country needs a new “strategy for upsurge.”

In a televised, 30-minute speech to parliament and government leaders, the president said his countrymen “should not turn a blind eye” to their recent achievements but ticked off a dispiriting list of economic and social woes still shackling Russia.

Even on the usually fiery issue of threatened U.S. airstrikes against Iraq, Yeltsin, 67, appeared to tone down previous warnings that they could trigger a world war. Instead, he urged diplomacy to win Iraqi compliance with United Nations resolutions and described force as “the last and most dangerous option.”

Noting that, in Russia, production remains stagnant, investment lagging and government leaders devoid of fresh ideas for sorting out the country’s tangle of unpaid debts, taxes and wages, Yeltsin called for “a new strategy--the strategy for upsurge.”

But the message transmitted by the Kremlin leader in his fifth and most lackluster state of the state address was one of fatigue as this country of 148 million slogs through a seventh year of insecurity since the dismantling of the Soviet Union.

And as the increasingly reclusive Yeltsin read to the official assemblage in the Kremlin’s Marble Hall and to state TV cameras, his distant, dazed image seemed to reflect the general malaise felt by many Russians who have come through a trying transition only to become confused about who they are and where they have landed.

“In recent years, each of us has often asked himself, ‘When will we overcome the crisis? When will Russia begin to rise to her feet?’ ” Yeltsin said at the start of his presentation.

The answer, apparently, is “not yet.”

“We now have the right to say that the conditions for recovery have been created,” Yeltsin said, expressing hope for significant economic growth this year and repayment of the government’s staggering arrears.

*

Speaking of the short-lived expectation of Russia’s industrial rebound, he observed: “In the fall, we came within reach of creating the financial prerequisites for the influx of investment. But it didn’t happen because of the world financial crisis and partly because of our own miscalculations.”

Ironically, as Yeltsin lamented the obstacles deterring broader foreign investment, the president of the American-Russian Business Council was announcing that U.S. investment in Russia last year hit an unprecedented $4 billion--more than three times the pace of five years ago.

Still, U.S. investment in Russia remains severely limited by investor fears of legislative risk and the prolonged absence of a tax code, said council President Eugene Lawson. He noted that U.S. per-capita investment in Russia is just $47, compared with $130 per capita in populous China.

Yeltsin last year used his address to warn of an impending government shake-up, and within two weeks had dramatically jump-started reforms by bringing in privatization overlord Anatoly B. Chubais and the popular governor of Nizhny Novgorod, Boris Y. Nemtsov, to serve as first deputy prime ministers.

This year, Yeltsin refrained from making any grandiose predictions of prosperity being within reach or of his scandal-ridden government being at any immediate risk of replacement. He gave the government until mid-May to propose belt-tightening measures, until September to halt the epidemic practice of running up bad debts and until the end of this year to begin chipping away at the money owed by the state to millions of workers and suppliers.

Yeltsin called for stronger government protection of private business “from extortion and arbitrary acts of bureaucrats, from excessive requirements for various permits, from criminal bribe-taking” so that a thriving middle class can finally take root in Russia.

“Let me repeat the elementary truth: Small and medium business is an axiom of a stable economy,” Yeltsin said. “If we do not support it, we will waste effort by building a house without a foundation.”

*

Russia has managed to bring down inflation to about 10% now from a 1993 level in quadruple digits, and the country posted 0.4% growth last year--negligible except that it represented the end of a post-Soviet production tailspin.

Concluding with a fillip of enthusiasm, Yeltsin urged Russians to press on with the protracted drive for the new society envisioned with the collapse of communism. “At the turn of the century, Russia has been presented with a truly historic chance of being not only free but also prosperous, of straightening its shoulders and becoming one of the leaders of the new world,” he told his audience.

As soon as he was whisked out a rear door of the hall after the speech, from which journalists were excluded, his detractors seized the moment.

Yeltsin’s address was “the most gray, empty and uninteresting of any address” ever heard, said Communist Party leader Gennady A. Zyuganov.

Liberal economist Grigory A. Yavlinsky dismissed Yeltsin’s account as evidence that “there are no changes in the life of the country.”

Nationalist former army general Alexander I. Lebed said he thought the speech demonstrated that Yeltsin is incapable of governing the country, and ultranationalist Vladimir V. Zhirinovsky described the address as “disgusting.”