Politics Hurts Former USSR

Political obstacles may thwart economic reform in the former Soviet republics, said a prominent Russian economist at the Kennedy School of Government last night.

"Political obstacles created by politicians make the success of economic reforms impossible," said Grigory Yavlinsky, in the fifth annual Gordon lecture, which was titled "Can Russian Economic Reform Succeed?"

The economist, who is currently the chairperson of the Center for Economic and Political Research--a Moscow-based independent think-tank--went on to outline several political impediments, all of which undermine the formation of a single, coherent economic policy in the former Soviet republics.

First, he referred to the dilemma of "one currency, 15 budgets," quipping that balancing even one budget is often a difficult task.

Second, he said "the borders of economic stabilization are unclear." Since each country of the former Soviet Union has put forth its own economic and tax policy, the eventual success of these steps remains in question.

Third, he said that each republic has extended a unique credit policy, further inhibiting cooperation between the members of the struggling Commonwealth of Independent States (CIS).

In response to a question from a member of the audience, Yavlinsky--who, with Dillon Professor of Government Graham T. Allison Jr. '62, recently devised a program of Western assistance to the former republics--recommended that CIS states strike an economic treaty to advance privatization and price liberalization.

But the road to reform, he said, is bumpy at best, as economic changes will almost certainly create hyperinflation. If, for instance, Russia carries out a planned liberalization of oil prices, the cost of oil will increase to ten times its current cost, he said.

In spite of his occasionally grim view of the future of the former Soviet Union, Yavlinsky, who was deputy prime minister of the Russian Federation in 1990, noted the encouraging results of the empire's demise.

"Communism will never come back and democracy is a real goal," he said. "Russia will not be an oppressive military power" in the near future.

Yavlinsky closed his lecture on a hopeful note. As long as there is not tremendous bloodshed, he said, "everything is possible."