Boris gets economic motor running


Moscow -- MOSCOW NEWS columnist Aleksei Pushkov likes to explain the political and economic changes taking place in Russia today through the life of his neighbor: "He was this poor driver who lived in the apartment off the entryway. Every Friday night he would get drunk and sing along, over and over in a very loud voice, to two English songs: 'Happy Nation' and 'All She Wants Is Another Baby.' He had no idea what the words meant. When he got really drunk, he'd start beating his wife and she would start screaming. He was driving us crazy. I wanted to throw a grenade at him.

"Anyway, about eight months ago, I don't know how, he got a share in a small car repair shop," continued Mr. Pushkov. "Since then, no more 'Happy Nation,' no more singing all night, no more beating his wife. He leaves every morning at 8:30 for work and he is satisfied. He knows he has some prospects in life now. My wife said to me the other day, 'Hey, look at Happy Nation' -- that's what we call him -- he's an owner now.' "

The story of Happy Nation explains in microcosm the two most important developments in Russia today: The economy is finally showing signs of a real turnaround, and this economic improvement is beginning to reshape Russian politics.

The upturn in Russia's economy -- still highly tentative -- can be measured in a variety of ways: Monthly inflation is down from 17 percent in January to 9 percent in March. Interest rates are down from 300 percent last year to 120 percent today. There are so many new cars on the streets in Moscow that traffic jams are now a real problem.

More important, the government's will for the tough budget cutting and tight money policies required to bring inflation under control has finally manifested itself, after years of voodoo economics. This is not because Russian leaders have gotten wise, but because they have gotten desperate.

As important, Boris Yeltsin -- who let the Marx Brothers run the Central Bank the past three years -- has finally installed a professional, like-minded management team to run all the key economic policy-making bodies, led by the impressive first deputy prime minister, Anatoly Chubais. Finally, the International Monetary Fund is now doling out significant amounts of money to Russia each month -- after the Russians do what they promise.

Much can still go wrong. Corruption is rampant. Chechnya smolders on, and the farmers and ailing state industries will pressure Mr. Yeltsin to bust the budget. Nevertheless, some smart money people here think the ruble at 5,200 to the dollar is a good buy.

This has important political ramifications: In the 1993 parliamentary elections Russia's new capitalists, shopkeepers and yuppies tended to shun politics. For them, government was something to be avoided, while they were busy making money. That was a hangover from Communism. As a result, Mr. Yeltsin got stuck with a sharply divided parliament, in which he floated between a fragmented group of pro-Western liberals on one side and loony nationalist right-wingers on the other. He had no center to align himself with. But members of Russia's emerging entrepreneurial class now realize that in a democracy politics matters, because the government decides the laws and conditions under which they work.

Thomas L. Friedman is a New York Times columnist.

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