Personalities, Not Laws, Rule in New Russia

Like a set of nesting dolls, Russia's national and regional governments were meant to work as one unit. But local officials in cities like Ulyanovsk exert total control and are resisting reforms.

IN Moscow these days the streets are clogged with Mercedes, BMWs, and Fords, stores are brimming with goods, and people can dance 'til dawn in a growing number of night clubs.

Judging by the scene in the Russian capital, one might think the worst is over for Russia as it moves from a centrally planned system toward a thriving market economy.

But then there are places like Ulyanovsk, a sleepy, windswept, provincial city on the Volga River, where one finds a sharply different view of Russia.

The city, birthplace of Bolshevik leader Vladimir Lenin, is only about 500 miles east of Moscow, but it is light years behind the capital in terms of economic reforms. The commercial kiosks that proliferate in Moscow are conspicuously absent here. A foreign-made car is a rarity.

The fact that two such diametrically opposed ways of life exist simultaneously in Russia is due to the nation's undeveloped federal structure, political experts say.

Weak federal structures, the experts say, allow individuals to exercise great control over the nation's political and economic development. The will and whim of the leader remain dominant over Russia's institutions, says Dmitry Gudimenko, a political scientist at Moscow's Institute for International Relations and Global Economics.

``The legitimacy of action in Russia was never a large concern of the leadership. The results were always the important thing,'' Mr. Gudimenko says. ``It was that way under the czars, and the tendency strengthened under the Communists.''

Indeed, Russian politics is somewhat like a matryoshka doll, the hollow, bowling pin-like wooden figures that fit inside one another. The doll can either be a single entity, or when it is disassembled, five or more distinct pieces. In Ulyanovsk, the kingpin is the region's governor, Yuri Goryachev. And if Ulyanovsk seems stuck in the Soviet era, it is because Mr. Goryachev's administration wants it that way.

``The idea of socialism existed, exists, and will exist,'' says Tatyana Kuzina, head of the economics department at the Ulyanovsk Regional Administration.

The Soviet version of socialism still holds sway in Ulyanovsk. Visits to local stores are reminiscent of the pre-perestroika shopping experience, including the frustrating system of standing in numerous lines to make a purchase.

A stale smell, omnipresent during the Soviet era, permeates Ulyanovsk's main department store, caused by the shoddily made, slow-selling goods on the shelves.

Every night the Lenin Museum, built around the houses in which the Bolshevik leader was raised, is bathed in flood lights.

In the economic sphere, Mr. Goryachev's administration still pulls Soviet-like levers to try to ensure a stable, if stagnant environment. It continues to spend one-tenth of the regional budget on subsidies for essential food items. Also, officials are working with many factory directors to keep plants producing and unemployment low.

``We are not against reforms,'' Ms. Kuzina says. ``We've selected a specific direction for reforms that we think is more tolerable for people and the factories.'' To each his own

Little has happened in the last few years to weaken the matryoshka principle in Russian politics, explaining why Yeltsin can be the master of the Russian Federation, while Governor Goryachev is ensconced in Ulyanovsk, Gudimenko says. The situation in Ulyanovsk vis-a-vis Moscow is not unique. Many local leaders, even after the failed October rebellion, retain the ability to act as they see fit in their regions.

The system will not be easy to change, in part because its foundation consists of a network of personal connections built by today's rulers when they were yesterday's Communist Party apparatchiks, Gudimenko says. As many Russian political institutions lack any real power, personal ties are perhaps the key element keeping the nation together.

``Personal connections are so important that they can transcend ideological differences,'' Gudimenko says. ``[Prime Minister Viktor] Chernomyrdin is more conservative than Yeltsin, yet the two can work together because they both grew up in the same environment of the Communist Party leadership.''

Goryachev served as the region's Communist Party boss before Yeltsin appointed him governor, just as the Russian president served as party boss in his native Sverdlovsk region before moving to Moscow.

Alexei Mikhailov, a senior economist at the Epicenter think tank in Moscow, says the Yeltsin administration actually strengthened the ability of regional governors to act independently of federal authorities when it introduced the ``shock therapy'' reforms in January 1992. Those reforms drastically curtailed federal expenditures on regions, while giving local leaders more decisionmaking ability.

Under the matryoshka principle, however, the power of a governor such as Goryachev is not total within the borders of his fiefdom. Town and rural leaders have their own little spheres of influence, and even factory directors have to be factored in.

A legacy of the Soviet era gives factory directors broad powers over their work collectives. That is because all factories are responsible for the social welfare, including housing and schooling, of their employees.

In the case of the UAZ jeep factory, one of Ulyanovsk's largest enterprises, this system is causing friction with the local political leadership. Unlike many plants that are struggling in the new competitive business environment, UAZ is finding there is more demand for its sturdy jeeps than it can meet. Things are going so well that factory managers are now looking to break into the tough US auto market. Frightening success

UAZ's success, however, is a cause for ``concern'' among Ulyanovsk regional officials, local businessmen who have dealings with the plant say.

The average monthly salary at UAZ, for instance, is 220,000 rubles (about $220), an enormous sum by local living standards. That is generating envy from workers at other area plants, as well as straining administration efforts to maintain stable prices for consumer goods.

Conversely, factory officials would like to pass social welfare responsibilities for its 25,000 employees on to the local government.

``Our desire is to pay our taxes and let the government take care of the rest,'' says UAZ deputy director Vladimir Antonov.

But local officials are hardly eager to assume this extra burden. Gudimenko says the issue has the potential to become a source of future conflict.

The inability to shed social responsibilities is a huge obstacle that blocks the profitmaking potential of many factories such as UAZ, according to Mr. Mikhailov.

``What foreign firm, or Russian, will be interested in investing in this or that enterprise if most profits are eaten up by social obligations?'' he says.

Many experts here agree that the only way to break with the past and establish the supremacy of institutions over the will of personalities, is through lasting constitutional reform. A legal overhaul could go a long way toward leveling Russia's political and economic playing field, enabling the nation to fully realize its potential, they add.

But Mikhailov says that if the economic reform experience is any indication, Yeltsin's current constitutional overhaul stands a good chance of derailing. The role of personality in politics, he adds, will diminish only when the market greatly expands, creating a middle class of proprietors.

``Unfortunately, economic reforms are proceeding in such a direction that bureaucrats retain a large amount of decisionmaking power,'' Mikhailov says.

``We are moving toward a Latin American style of economics and politics,'' he adds. ``And we can see what a prominent role personalities play in the lives of Latin American nations.''