Global Intelligence Update
August 27, 1998
"Deal With Me, Or Deal With Zhirinovsky"
On Wednesday, August 26, as the Russian economy teetered near the edge of
total collapse, newly reinstated Prime Minister Viktor Chernomyrdin
unexpectedly flew to Ukraine for emergency meetings with Ukranian President
Leonid Kuchma, Belorussian President Alexander Lukashenko, and
International Monetary Fund Managing Director Michel Camdessus. Before he
departed for the Crimean, Chernomyrdin reportedly met in Moscow with
Russian Communist Party leader Gennadi Zyuganov, Russian Liberal Democratic
Party leader Vladimir Zhirinovsky, and Krasnoyarsk Governor Alexander
Lebed. While Chernomyrdin was scurrying between meetings, Russian
President Boris Yeltsin was nowhere to be found, until it was eventually
revealed that he was working from his country home, 60 miles outside of
Moscow. The question: What did Chernomyrdin hope to gain from his sudden
trip to Ukraine that warranted leaving crisis-ridden Moscow in the care of
acting Deputy Prime Minister Oleg Sysuyev?
The latest phase in Russia's collapse began last week, when the government
of then Prime Minster Sergei Kirienko announced both that it would let the
ruble fall from 6.3 to 9.5 to the U.S. dollar by the end of the year, and
that foreign debt payments by commercial banks would be frozen for 90 days.
Last Sunday, President Boris Yeltsin fired Kirienko, replacing him with
former Prime Minister Chernomyrdin, whom he had fired only five months
previously, just prior to selecting Kirienko. Whatever Yeltsin's motives
were in choosing Chernomyrdin, his selection did nothing to calm the
situation either inside or outside of Russia. The general consensus was
that the new/old Prime Minister was a non-starter. The financial situation
continued to deteriorate, reaching new lows on August 26 when the Central
Bank halted trading on the Moscow Interbank Currency Exchange and annulled
the day's trading of the ruble.
It was in this crisis atmosphere that Chernomyrdin held separate meetings
with Zyuganov, Lebed, and Zhirinovsky. Zyuganov is the head of the
Communist Party, the largest party in the Duma, and a leader with a large
and growing following. Lebed, who was head of the national security
apparatus before being fired by Yeltsin, is a nationalist leader who draws
on his record as an airborne general. He speaks for substantial numbers of
non-communist nationalists. Chernomyrdin needs the Communist Party's
support for his own confirmation in office and for the success of his
economic plans. He needs Lebed's support to win over the fractious
nationalists. However, Chernomyrdin's meeting with Zhirinovsky had
multiple purposes.
Zhirinovsky's Liberal Democrats, with 51 seats, are the third largest party
in the 450 seat Duma, after the Communists' 157 seats and Chernomyrdin's
own "Our Home is Russia" party's 55 seats. The only other parties with
more than 9 seats are reformist Grigori Yavlinsky's Yabloko party, with 45
seats, and the Russian Agrarian Party, with 20 seats. While Chernomyrdin
needs Zhirinovsky's support for his confirmation as Prime Minister,
Chernomyrdin's meeting with Zhirinovsky also intended a psychological
effect.
Zhirinovsky, while head of the third largest party in the Duma, is more
notorious for his outrageous statements and extraordinary antics. His
political base grew out of a heavy metal music shop, and he delights in
visiting such global pariahs as Moammar Khaddafi. By treating Zhirinovsky
on the same level as Zyuganov and Lebed, Chernomyrdin may have been trying
to tar the Communist and nationalist leaders with the Zhironovsky brush.
By saying that his political opposition consisted of the three, he may have
been trying to signal that the alternative to his government was not a
stable coalition of Communists and nationalists, but an unstable, fascist
regime with expansionist fantasies. In other words, he was signaling that
the choice was between him and chaos.
Who was he signaling? Certainly not the Russian public, who are not likely
to panic at the symbolism. Rather, the audience was Michel Camdessus, the
IMF and, through them, Western financiers. By meeting with Zhirinovsky
before flying off to meet with Camdessus in the Crimean, he was trying to
drive home two points to the West. First, that the Yeltsin regime was
tottering and might fall. Second, that the follow-on regime was likely to
be much less stable and rational than Westerners might expect. In other
words, if the IMF, looking at Yeltsin's impotence, thought that they might
be better off dealing with a Zyuganov-Lebed regime, which at least had some
real popular support, they had better think again. Along with them, the
IMF and the West would get Zhirinovsky and the return of the Cold War.
The second audience was the Ukranian government. Camdessus had been
dealing with the Ukranians, who were in far better shape financially than
the Russians. Chernomyrdin was reminding them that events in Moscow will
shape events in Kiev. In other words, if they make a deal with the IMF
which takes care of their needs, without a comparable IMF deal with the
Russians, they would be facing a new government in Moscow, one that would
include Zhirinovsky. For good measure, Chernomyrdin brought along
Alexander Lukashenko, President of Belorussia and a man with deep nostalgia
for Brezhnev. Ukranian President Kuchma was invited to see the future.
Chernomyrdin is desperately shouting, "apres moi, le deluge," trying to
convince the West and Ukraine that they can't afford to let him fail. In
playing the Zhirinovsky card, he may have concerned his audience, but it is
unlikely to panic them. Yeltsin scares them quite enough.
The IMF cannot bail out Russia, and Western banks will not bail out Russia.
Ukraine is not in a position to underwrite loans to Russia. Chernomyrdin
is posturing to an empty theater. What is interesting about all this is
the length to which Chernomyrdin feels he must go to get attention. Also
significant is the fact that he no longer has many options. Zhirinovsky is
a fascist, but he is not going to be included in the government. The issue
is not whether or not there will be a government of national unity
including communists and nationalists, but how many ministries Yeltsin will
be able to hold on to.
One threat, however, is real. The new government will radically redefine
Russian foreign policy. The West will look back with nostalgia on the
1992-1998 period. Unfortunately, there is nothing the West can do to save
this corrupt and failed reform attempt. Even if he was frightened by
Zhirinovsky, Camdessus cannot save Chernomyrdin and Chernomyrdin cannot
save Yeltsin. The deluge is not coming. It is here.
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