Yeltsin Rallies Support, Moves to Placate Critics

Premier pledges to ease impact of reforms on industry and the people

RUSSIAN President Boris Yeltsin rallied supporters around the banner of radical reform yesterday, but said a strategic retreat in some areas was needed to soften the impact of the austerity measures on the population.

"Only one avenue of advance has the right to exist now - the continuation of radical reforms," Mr. Yeltsin said in a speech to the Assembly of Russian Citizens. At the same time, the president promised changes in Russia's tax structure and increased aid to struggling industry, as well as more Cabinet changes.

Yeltsin's speech came the day before the opening of the sixth session of the Congress of People's Deputies, Russia's supreme legislative body. During the congress Yeltsin and his government expect fierce attacks from conservative legislators opposed to the fast pace of reform. The moves Yeltsin announced are seen as an attempt to seize the initiative from his opponents in the congress.

Yeltsin left no doubt during his address to the Russian assembly that he considered it the president's responsibility, not the parliament's, to oversee the transition from the old communist economic system to a market economy.

"With a multiparty system that is still in an embryonic state in Russia, and ... under the conditions of a deep crisis, a transition to a parliamentary form of government would be of course extremely difficult, undesirable, and inadmissible," Yeltsin thundered.

Many deputies in the congress say they want to trim the president's broad powers. In addition to chief executive, Yeltsin holds the positions of prime minister and defense minister.

Yeltsin sought to placate his critics over the weekend by announcing a series of Cabinet changes. The first move came late Thursday, when the president appointed Vasily Barchuk as finance minister, replacing Yegor Gaidar, who retained his position of deputy prime minister in charge of economic reform. In the succeeding days, Deputy Prime Minister Gennady Burbulis resigned from the governmental post, while staying on as state secretary. Yeltsin also removed unpopular Minister of Labor and Employment Alexa nder Shokhin, who, like Mr. Gaidar, kept his title of deputy prime minister.

In yesterday's speech, Yeltsin pledged to bring into the government entrepreneurs and industrial executives. The industrial sector has been hardest hit by the government's reforms. To ease the burden Gaidar wants to make 200 billion rubles (about $2 billion) in credits available to businesses. According to a government document, industrial enterprises have almost $700 billion rubles ($7 billion) in overdue loans.

On Saturday Gaidar played down the Cabinet reshuffling while talking to reporters in Nizhny Novgorod, about 300 miles east of Moscow.

"It will not strongly help the reform program," Gaidar said. "The real problem isn't the personnel problem. The real problem is the consequences and the consistency of the ... economic policy. And here you'll probably have the major battle in the congress."

Televised comments made by Parliament Speaker Ruslan Khasbulatov, a long-standing critic of government reform policies, on Saturday night appeared to support Gaidar's view. Mr. Khasbulatov dismissed the Cabinet reshuffle, saying it still comprised "people who have no idea what agriculture is and people who have no idea of what industry is."

Though giving the appearance of being defiant, Yeltsin actually incorporated many of Khasbulatov's previously proposed changes to the reform program in his speech yesterday.

During parliamentary debate last week, the speaker proposed a drastic overhaul of the tax structure. The value-added tax should be cut from 28 percent on most items to 20 percent, while levies on profits should rise up to 45 percent, Khasbulatov said. He called for measures to stimulate industry, and for increased welfare protection for the population.

Meanwhile, Yeltsin may be attempting to distract congress deputies from domestic problems by whipping up tension with neighboring Ukraine. On Friday he threatened to issue a decree placing the disputed Black Sea Fleet under Russian control in order to transfer it to the Commonwealth of Independent States armed forces. Ukraine and Russia have wrestled for control of the 300-vessel fleet since the breakup of the Soviet Union in December.

Ukraine insists on control of 30 percent of the fleet, which is headquartered at Sevastopol. Russia wants most of the ships, some of which are nuclear-capable, to remain under commonwealth jurisdiction.

In responding to the Russian leader's comments, Ukrainian President Leonid Kravchuk accused Russia of using intimidation tactics and vowed he would take "adequate" countermeasures if Yeltsin tried to seize control of the fleet for Russia.