. . . Yeltsin's debacle

PUBLISHED : Wednesday, 09 September, 1998, 12:00am
UPDATED : Wednesday, 09 September, 1998, 12:00am

Whatever Mr Clinton's problems, they pale beside those in Moscow where President Boris Yeltsin has already lost control of his nation's destiny in all but name.

Mr Yeltsin was huddled in his dacha yesterday with a handful of aides, desperately trying to decide what to do after parliament had massively rejected - for the second time - his nomination of Viktor Chernomyrdin as premier.

To some extent, it no longer matters what Mr Yeltsin decides. The initiative is no longer in his hands. Parliamentarians who have scented blood know that they have nothing to lose in defying the enfeebled president.

The only question that remains unanswered is how much more power he will eventually be forced to concede.

Not that Mr Yeltsin has much authority to exercise these days. Real power has seeped away from him to the industrialists and financiers who bankrolled his re-election in 1996 and have since treated this as a licence to carve up the state. While Mr Yeltsin was still in a more coherent state, he forced them to exercise some restraint. But now Russia no longer has an effective government, and there is no force to hold the robber barons in check.

More broadly, there is nothing on the policy horizon which can be done to prevent the economy from sliding into the abyss. Foreign donors have no one whom they can trust to deal with over further aid packages, even if they were inclined to extend such assistance following Moscow's recent default on its short-term debt.

While the power struggle continues, any economic rescue packages will simply be bargaining chips and cannot be taken seriously, as shown by the unrealistic plan to set up a Hong Kong-style currency board. In the short term, it is impossible to be optimistic about Russia's future. Mr Yeltsin is unlikely to quit voluntarily, and none of his potential replacements inspire much confidence.

But, so long as the president remains in power, there will be a vacuum at the centre. The world cannot ignore that, but can only hope that Russia's collapse does not drag other economies down with it.