One month after "Black Tuesday" -- the day the Russian Ruble fell 24 percent -- President Boris Yeltsin's answer to the debacle has been still another purge of high government officials. There also has been dark talk that the government was a victim of conspiracy. The more compelling explanation: Stupidity.
All summer long, Moscow printing presses were churning out excess rubles to satisfy demands for subsidies from near-defunct state industries, from communities established long ago by Stalin in un-viable northern reaches and, especially, from an agriculture sector that still includes too many huge and inefficient state farms. These are the leftovers from the discredited Communist system.
Everyone knows outlandish subsidies have to go eventually if Russia is to achieve a market economy. But the apparatchiks near the summit of Russian power -- Prime Minister Viktor Chernomyrdin and central bank director Viktor Gerashchenko -- were reluctant to move too quickly.
What happened? The government let its precious reserves of hard foreign currencies fall by more than half, perhaps to a skimpy $2 billion. (The exact figures are a secret.) As inflation crept upward, the brittle financial markets on the cutting edge of Russian capitalism responded as markets do everywhere once fear hits investors.
As the value of rubles plunged, the central bank bought them up cheap and then intervened to produce a healthy bounce-back. But wounded memories linger. In the past month, Mr. Chernomyrdin has survived a no-confidence vote in the Duma, Mr. Gerashchenko has been ushered out of the job he handled with consistent ineptness, the economic and finance ministers have been replaced and government has issued a 1995 budget in which it promises to market treasury bonds rather than just pump up the money supply to finance deficits.
Mr. Yeltsin's purges have the dual purpose of (1) safeguarding his hold on power and (2) reassuring foreign investors. The first objective is always dicey, as witness his concurrent attempts to rid the armed forces of corrupt generals. As for foreign investors, their enthusiasm for putting money into the Russian economy has diminished about 80 percent since "Black Tuesday."
If there is a lesson from that debacle, it is that imprudent, easy-money policies can slap back at those who indulge. Mr. Chernomyrdin has said that "a strong ruble is the indispensable condition for the revival of the Russian economy." But he let money supply grow 13 percent a month and inflation return, all to appease regressionists.
Despite setbacks in the financial markets, gross national product shows real growth for the first time in three years, half from privatized enterprise, and the service sector of the Russian economy is growing nicely. The need now is to move from half-hearted reform to real reform.