Tensions Rise in Baltics, But Ease in Moscow

Gorbachev-Yeltsin budget deal may pave way for federation discussion

LITHUANIA'S Prime Minister Kazimiera Prunskiene has fallen as a casualty in the war between the Kremlin and the Soviet republics. The popular Lithuanian leader and her Cabinet were suddenly forced to resign on Tuesday when a battering ram of angry protesters, organized by pro-Soviet forces, intimidated the parliament into suspending a controversial economic reform policy.

The departure of the more moderate voice of Ms. Prunskiene is likely to strengthen radical forces on both the nationalist and pro-Soviet side of the political battle, most analysts say. It will lead to further polarization and prospects for confrontation with Moscow, coming on the heels of the announcement that Soviet paratroopers were being dispatched to round up young men in rebellious republics who are refusing to respond to draft calls for Soviet Army duty.

But this rising tide of tension in the Soviet Union was eased somewhat on Tuesday by the announcement that President Mikhail Gorbachev and Russian leader Boris Yeltsin had reached an agreement on financing the 1991 budget. The giant Russian Republic, which provides the majority of funds to the national budget, had earlier declared its intention to sharply reduce its contribution.

The deal has encouraged some who see a Gorbachev-Yeltsin axis as a bar to the visible drift toward right-wing authoritarianism. ``Yeltsin understands that now the only way is to support the president against this turn of the tide,'' comments a well-informed Russian government source. And for Mr. Gorbachev, ``maybe an alliance with Yeltsin is the only way to escape being overthrown.''

Such thoughts may turn out to be far too optimistic, given the track record of fierce political rivalry already established between the two men. But the economic agreement certainly strengthens Gorbachev's hand, because, as the Russian source puts it, ``he saves his face without needing to publicly force the Russian parliament to back down.''

At the core of the budget battle is struggle over the division of powers between the central government and the republican governments. Gorbachev is seeking to consolidate a renewed federal union around a strengthened presidency, the policy course he pushed at the meeting of the Congress of People's Deputies that concluded two weeks ago.

But Mr. Yeltsin spoiled the conclusion of the Congress by refusing to sign an economic and budget agreement between the republics and the Kremlin. The Russian parliament had at first said it would allocate only 23 billion rubles ($14.3 billion at the commercial rate of exchange) to central coffers out of the 119 billion rubles expected. Later Yeltsin upped the offer. But it was still significantly short of what the central government said it needed.

The agreement signed on Tuesday now makes it possible for the delayed national budget to be passed and a division of economic powers to be ratified at a meeting of the Federation Council, in which the republics are represented, scheduled for Jan. 12.

The Tass news agency quoted Russian parliament vice-chairman Ruslan Khasbulatov saying that Yeltsin had ``upheld'' the Russian budget and ``fulfilled the will of the Russian Supreme Soviet [parliament]'' in the deal.

``The government, the Soviet president and the leaders of the Russian Federation think that a well-considered correlation between the sovereignties and rights of the republics and those of the union as a whole was found,'' Yuri Maslyukov, head of the State Planning Committee, told the parliament yesterday, according to Tass.

``A compromise was found,'' says the informed Russian source. ``Russia is ready to give up practically the whole sum but the disputed part will be returned to Russia.'' In principle, he explains, the republic will have a say over how its money is spent on national programs. In addition, Yeltsin won greater control over the energy resources of the republic, including coal, oil, and gas resources.

Such an economic pact, if it is finalized at the Federation Council meeting on Saturday, will allow Gorbachev to increase pressure on the nationalist governments in the Baltics which have balked at joining it. Latvia and Estonia have already adopted their own price policies, massively hiking state-controlled prices as part of a move to a market-based economy. The Lithuanians, who had refused to participate in forming the budget at all, had moved to introduce similar price rises, beginning this week.

The fall of the Prunskiene government over this issue is already being gleefully interpreted by Soviet sources as evidence that independence-oriented policies will fail.

``In exploiting the attractive slogans of independence and national revival, the Lithuanian leadership embarked on a path of open violation of Soviet laws,'' Tass analyst Andrei Orlov wrote in a commentary on the resignation of the government. ``In so doing, it failed to assess correctly the potential of economic reform and the population's preparedness for self-sacrifice.''

But the situation in Lithuania is far more complicated than that account suggests. The price hikes had in fact been in preparation for a considerable period of time, discussed and approved by the parliament and anticipated by the population.

Moreover, Lithuanian government sources say, the 5,000 people who gathered in front of the parliament on Tuesday formed a well-organized crowd, pulled together by the right-wing Interfront organization, an umbrella for Russian minorities and orthodox Communists in the Baltics and other non-Russian republics. The demonstrators were exploiting the weakened state of the Prunskiene government, which has been under political attack in the parliament for months by radical elements of the nationalist Sajudis movement.

Prunskiene, a popular economist, has been the key voice arguing in favor of negotiation with Moscow.

``Radicals on both sides confronting each other will provoke incidents, which will provoke the military to intervene,'' predicted Soviet analyst Igor Seduyk.