Russian President Defends Reform Plan

Yeltsin also toughens stance with Ukraine over Black Sea Fleet

A DEFIANT Boris Yeltsin vowed to continue the radical economic reform policies of his government, brushing aside critics in a major address April 7 to the country's supreme legislature.

"The government intends to continue its course of reform despite the criticism," the Russian President said in an hour-long speech to the Congress of Peoples Deputies.

President Yeltsin warned against attempts to reduce the powers of the presidency.

"This may throw the country into the chaos of conflicts, political ambitions and will open a way to regional separatism," he warned. "A strong executive can be a guarantee for the unity of Russia and continuation of the reforms."

But while the Russian leader spoke in confident tones about the correctness of his policies, he also acknowledged "mistakes" and outlined steps to loosen tight controls over government spending and credit.

The economic debate at the congress has almost been eclipsed, however, by rising emotions of Russian nationalism as delegates demand a response by the government to a conflict in Moldova between the Romanian-majority government and the Russian-speaking minority and to growing tensions between Russia and Ukraine.

Ukrainian President Leonid Kravchuk issued a decree April 6 asserting control over all the former Soviet forces based on Ukrainian territory, including the disputed Black Sea fleet.

Yeltsin, responding in part to Mr. Kravchuk's statement, told the Congress that Russia was moving to create its own army and navy "in the near future."

The large force would be formed out of units based on Russian territory as well as the former Soviet military based in Germany, Poland, the Baltics, Mongolia, and in the Transcaucasus.

Even after a reduction of some 700,000 men, this force will number about 1.5 million men, he says, and will be formed on a volunteer basis.

The Russian leader reiterated the stance that the Black Sea fleet is part of the common strategic forces of the Commonwealth of Independent States which replaced the Soviet Union.

Commonwealth commander-in-chief Yevgeny Shaposhnikov told the Congress that a decree has been prepared to bring the whole Black Sea Fleet under Russian jurisdiction, although it will still respond to the joint commonwealth command. Following that move, Russia would be willing to negotiate to give Ukraine back part of the fleet, he said.

Yeltsin devoted most of his speech to a defense of his controversial "shock therapy" shift to a market economy.

"Now we have a clear, realistic course of deep, economic reforms," Yeltsin declared. "For the first time, we have succeeded in making the economy speak the language of finances; monetary and credit policies are gradually, though with great difficulty, becoming the main factor of economic motivation."

Yeltsin also outlined a series of measures, most of them announced shortly before the Congress opened on April 6, to spend another 200 billion rubles (about $2 billion) to stave off the collapse of state-owned industry and agriculture. He also talked about steps to ease a tough tax policy that had been aimed at bringing about a now abandoned goal of a balanced budget.

"The president was forced to admit that to go on being stubborn was dangerous," Nikolai Travkin, head of the Democratic Party of Russia commented after the speech. "The government sees that it has lost the social base for reforms."

On April 2, Yeltsin moved to soften the impact of attacks on the reform by removing several key figures from their ministerial positions.

"The main idea of Yeltsin's report was the necessity to preserve reforms when half of those present do not want reforms," said Col. Gen. Dmitri Volkogonov, a deputy and Yeltsin military advisor. "Reforms should be made more civilized; serious corrections should take place in the composition of the government and to the tactics of reforms."

Mr. Gaidar's reforms began on Jan. 2 with the freeing of prices on most goods, a step that has long been recommended by foreign and other economic advisors.

He combined that liberalization with a tough fiscal and monetary austerity policy aimed at cutting the huge budget deficit and curbing hyperinflation. While the policy has been successful in bringing more goods to store shelves, it has cut deeply into personal incomes and deepened an ongoing depression-level collapse of industrial production.

Russian reform chief Yegor Gaidar stressed that the reforms had won Western backing and were now drawing "the West's vast financial support." He praised the recent Western decision to offer a package of $24 billion in support this year, including a ruble stabilization fund. "This program can be compared in scope only to the famous Marshall Plan," Gaidar told the Congress.

Yeltsin tried to tell the Congress that the reforms were a necessary consequence of the horrendous economic conditions they had inherited from the previous Soviet government of Mikhail Gorbachev.

Yeltsin acknowledged that economic stability remains a distant goal and that reforms in certain key areas - such as privatization of industry and agricultural land - are badly lagging. He gave a nod to the widespread belief that the privatization reforms are so far mostly benefiting a small handful of rich black-marketeers.

Gaidar, following his boss to the podium of the Grand Kremlin Palace, also admitted that "we have a long way to go before we fully arrest the plunge in production." But he also asserted that reforms were working to strengthen the ruble, the value of which has risen against the dollar.