Where the Action Is in Russia

THE replacement of Yegor Gaidar with Victor Chernomyrdin as prime minister of Russia ends the political gridlock in Moscow. It also hands radical reformers a defeat. But this event will not lead to the restoration of central control, as the state-industrial lobby hopes. It is likely, however, to result in more inflationary policies and inconsequential attempts to restart the economy through central planning, thus adding to the disintegrative forces within Russia and, ironically, weakening the central gov ernment even further.

Western media and policymakers have missed the real story of political and economic change in Russia: Preoccupied with political jockeying inside Moscow's Beltway, they have paid little attention to the rise of Russia's periphery as the locus of political and economic power.

This trend may not seem as significant as the disposition of nuclear arms, economic aid, or the reactionary opposition's onslaught against the Yeltsin government. But the transfer of power from Moscow to Russia's periphery is of more lasting importance. It ought to be factored into our policies toward Russia.

Given Russia's size, its regional and ethnic diversity, and its needs, no centrally devised reform program, no matter how clever, could encompass the entire challenge of transforming the country from an authoritarian state and planned economy to a democratic state and capitalist economy. Devolution of power to the regions, by design or default, offers the only hope for economic reform in Russia.

To some, the erosion of Moscow's authority is a harbinger of dangerous instability in a country where the foundations of pluralistic society have yet to be laid. But the erosion of central authority has been offset by a rise in the standing of regional and local leaders.

The strengthening of regional political and economic forces poses a formidable obstacle to the reactionary elements in Moscow who would like to restore an authoritarian central government and reassert Moscow's control over the territories of the former Soviet Union. Any such attempt would encounter strong opposition from ethnic and regional political movements in all former Soviet republics, including Russia.

The rise of local centers of power promises to be a key factor determining Russia's transformation. Economic reform in several regions has outpaced policies emanating from Moscow. Regional and local leaders have taken legal steps to wrest ownership of assets on their territories from Moscow. In some cases they are pushing ahead with privatization faster than the center had planned. The most successful initiatives on foreign investment and opening to the outside have come from these local leaders.

While the danger of political and societal breakdown in the young Russian state cannot be taken lightly, the chances of such an outcome would be even greater if a discredited central government attempted to hold on to the levers of power. The analogy with Mikhail Gorbachev's failed attempts to preserve the center's preponderance in economic and political life is obvious.

This mandates a new direction for Western policy toward Russia. From now on it must become sensitive to the rise of regionalism and the potential conflict between center and periphery. The West must realize that, as in the former USSR, no amount of reasoning on the "logic" of maintaining the union will persuade regional politicians to accept a dominant role for Moscow. Likewise, by politically embracing emerging regions, the West could damage relations with the center.

In light of these considerations, the US and other Western nations should take a fresh look at how they give economic assistance to Russia. Aid packages tied to macroeconomic indicators and federal government programs should yield to endeavors focused on regional economic growth and employment. The primary vehicle for a new aid policy toward Russia should be the World Bank, which has the appropriate charter and expertise. Fortunately, Yeltsin has appeared sensitive to regional political and economic tren ds. He has delegated important powers to regional authorities and has promised more of the same in the new Russian constitution. He seems to have learned from Mr. Gorbachev's mistakes.