The Russian Election Compendium

RUSSIAN ELECTION WATCH
SUMMARY OF RUSSIAN PRESIDENTIAL ELECTION CONFERENCE

Strengthening Democratic Institutions Project
John F. Kennedy School of Government

May 6, 1996

On April 18 and 19, Harvard's Strengthening Democratic Institutions Project (SDI) held the Russian Presidential Election Conference in Cambridge. Participants included:

• Yegor Gaidar (Former Russian Prime Minister)
• Irina Khakamada (Duma Deputy, President, Common Cause Party)
• Sergei Kolesnikov (Senior Advisor to Prime Minister Viktor Chernomyrdin)
• John Lloyd (Former Moscow Bureau Chief, The Financial Times)
• Alexander Batanov (Russian Political Consultant to Yeltsin and Moscow Mayor Luzhkov)
• Sergei Grigoriev (Senior Associate, SDI Project)
• Richard Rose (University of Strathclyde, Director, Centre for the Study of Russian Policy on Russian polling)
• Alexander Buzgalin (Moscow State University representing the Left in Russian politics)
• Graham Allison (Director, SDI, moderator)

As a transcript is being prepared, we have enclosed for you a quick summary of the ten most important issues emerging from our discussions. The full transcript will be available in two weeks by request. (For your amusement, I have also attached a case for my class this week that poses the hypothetical issue of Yeltsin postponing the election and asks the students to analyze the US response.)

I. Who Will Be the Next President of Russia?

• All participants agree that despite polls showing Yeltsin trailing Communist Party leader Gennady Zyuganov, Yeltsin is most likely to win the election.

• Gaidar judges the second round participants a foregone conclusion: Yeltsin and Zyuganov. Once in the second round, the race will be very close. He puts the odds at 50-50.

• Allison was the most reserved in predicting a Yeltsin victory, stating events could unfold to allow a Zyuganov win, but at the moment, he would give Yeltsin about a 1 in 3 chance; Zyuganov 1 in 4; and Yavlinsky 1 in 5.

II. How Likely is it That the Elections Will Be Canceled?

• Again, all participants believed that the election will not be canceled.

• Lloyd stated that Yeltsin had already thrown his weight behind a reelection campaign and could not back out at this point.

• Gaidar did not rule out cancellation, but strongly cautioned against it. To cancel elections would be an unconstitutional act and would force Yeltsin to depend exclusively on the power ministries, whose willingness to following extra-constitutional orders are uncertain.

• Allison puts the odds of cancellation at about 1 in 3.

• Khakamada wishes the election were not on. Although canceling the election at this point would only assist the Communists, Khakamada believes that with Russia in its current situation, the election is not essential and could return to power those who would prevent elections in the future.

III. What Will be the Economic Consequences of a Zyuganov or Yeltsin Victory?

Gaidar gave a succinct analytical summary of the inexorable, almost inevitable consequences of a Communist victory: economic expectations will cause a financial crash that forces elimination of ruble convertibility, shortages, implementation of price controls, and makes authoritarian politics likely - all of this virtually by the time Zyuganov takes office and independent of his preferences and actions.

• Since March, interest rates on Russian state treasury bills have been rising because of increasing anxiety about the election. In April, Russian enterprises and banks have been shifting their portfolios into hard currency, forcing the Central Bank to intervene in the market to stabilize the currency and to protect the treasury bills. Fortunately, the Central Bank has the reserves at the moment to cope with the current pressures.

• If Zyuganov wins the election, securities markets will crash, the over-supply of state treasury bills will find few buyers, and interest rates will soar. The Ministry of Finance will not be able to service the debt without selling the treasury bills, while investors will demand a prohibitive interest rate.

• As commercial banks, Russian enterprises, and average Russian families all seek to change their portfolios into hard currency, the ruble will come under increasing pressure. The Central Bank will face the unpleasant choice of (1) intervening to defend the ruble, possibly using its last foreign reserves or (2) allowing the ruble to continue to fall, creating additional pressure against the currency.

• Upon arriving in office, the Communist government will be confronted with a financial crisis and immense pressure to move away from the ruble convertibility regime. Elimination of ruble convertibility would be a serious strike against all market institutions in Russia.

• Many current import contracts end in June. If the exchange regime is suspended, new contracts will not be signed. This will reverse Russia's integration into the world economy.

• Sensing economic chaos, people will rush to buy staple goods such as sugar, soap, and matches. This will force a sharp increase in prices and produce shortages. To avoid hyper-inflation, the government will reinstitute price controls, creating lines.

• To address the chaotic economic conditions, the government will begin to turn to authoritarian political means to enforce its policies. This will raise the question, "Who is to be blamed?" The answer as in 1929: "enemies of the people."

Gaidar's forecast of the consequence of a Yeltsin victory was concomitantly rosy:

• A dramatic and immediate increase of the prices on the Russian stock market.

• Demand for State Treasury Bills, leading to lower interest rates and no fear of government default on its debt.

• An immediate transfer of dollars to rubles occurs, raising the ruble's value. This oversupply of hard currency could cause inflationary consequences that the government would have to address in the second half of the year.

• Judging investments in Russia are safe, foreign investors increase their levels of private investment with foreseeable consequences for GDP, production, budget revenues, and possibly social problems.

Again, Gaidar judges these developments an almost inevitable consequence of expectations in the wake of a Yeltsin victory, without reference to the Yeltsin government's economic policy after the election.

IV. How Will Chechnya Affect the Elections?

• Gaidar can see no way out of Chechnya prior to the election. Dudayev understands the political pressures of the election and will therefore not trust Yeltsin's negotiating stances.

• Allison concurred that a resolution before June 16 was highly unlikely, but believes a different path exists that could lead to a cease-fire within the next six weeks and holds out the promise of a resolution. He explains this would involve allowing President Shaimeiv of Tatarstan to mediate between the two camps and implementing a creative withdrawal of troops region by region as called for in the Hague II initiative.

• Khakamada stated that the population has grown accustomed to the war. It is only a burning issue for those who have children fighting in the region. (Some polls dispute this opinion.)

V. What Strategy Could Yeltsin Use to Win?

• The Good Tsar: Khakamada stated that Yeltsin needs to appear as the "Good Tsar." Other panelists concurred, and this phrase was used frequently. The Good Tsar appears benevolent and caring toward his people. He is above day-to-day difficulties and petty political bickering. The Good Tsar is forgiven for his mistakes if he is repentant and his misjudgments are attributed to the faults of his advisors who have given him misinformation.

• Batanov lamented the organization of the Yeltsin campaign. No real guidance exists and lines of communication are confused. The greatest mistake the campaign can make is to increase expectations that all problems will be resolved by June 16. Yeltsin errs when he promises payment of wage arrears, lower crime rates, and an end to the war in Chechnya. Yeltsin should stay in Moscow. This fits into both his Good Tsar image and his health constraints. He should use his office to create images "greater than he is."

• The current campaign strategy depends on (1) defining the Communists as a catastrophic return to the past; (2) pork barrel promises; and (3) guidance of television coverage. (As an adjunct to Yeltsin's campaign, Igor Malashenko, head of Independent TV (NTV), has joined Yeltsin's campaign staff and is proving more resourceful than most observers expected.)

VI. What Role do Foreign Policy & the West Play in the Election?

• Although foreign policy did not play a major part in the December Duma elections, two foreign policy issues will play a role in the Presidential elections: the reintegration of the former Soviet Union and the expansion of NATO. Yeltsin has taken some of the initiative from the Communists on the reintegration issue through his treaty with Belarus, signed in early April. With Yeltsin, reintegration will be voluntary and gradual. With Zyuganov and the militant left wing of his party, this cannot be guaranteed. Both camps agree on NATO expansion: it should not happen. Khakamada warned the West to be prepared for some heavy campaign rhetoric on the NATO topic in the near future, but to discount campaign statements in Russia as they would in the US.

• Support of Western leaders is a two-edged sword. On the one hand, the IMF loan and the G-7 leaders' meeting with Yeltsin in Moscow remind people that Yeltsin is a president who can stand on equal footing with the great nations. On the other hand, overt Western support backfires. The West's influence in Russian politics has waned considerably from its peak in 1991.

VII. How Will Yeltsin's Health Affect the Election?

• Lloyd asserted that Yeltsin's poor health may work for him. He will not have to travel often in the campaign, and with the Good Tsar image, he is forgiven for feeling exhausted. Yeltsin has a history of poor health and is reported to need heart by-pass surgery but only after the election.

• Batanov declared Yeltsin's health is a topic off-limits for Zyuganov and the Communists. They do not want to evoke sympathy for the President. Others felt the "Sick Tsar" may be perceived as too weak to manage. Khakamada explained that should Yeltsin die, she believes the constitutional process will be followed: Chernomyrdin will become President, and a new election will be held within three months. Furthermore, she believes Chernomyrdin will win the election because he is more popular than Yeltsin and is a more difficult target for Zyuganov. Allison agrees that Chernomyrdin is more popular than Yeltsin, but recalled that in the December Duma election, Chernomyrdin attracted 11% of the vote a caution as one looks toward June.

VIII. What Role Does Yavlinsky Play in the Election?

• Khakamada stated Yavlinsky is currently taking votes from Yeltsin. She believes that despite statements to the contrary, Yavlinsky is willing to work with Yeltsin if Yeltsin promises to make him Prime Minister. This raises the question: what would happen to Chernomyrdin? Batanov agreed that Yavlinsky is willing to deal, but said he should be prepared to settle for much less than the Prime Minister's office, perhaps Finance Minister. If he fails to deal with Yeltsin, Yavlinsky will be destined to remain a Duma deputy.

• Khakamada also explained that Yavlinsky is not a strong presidential candidate in this election because he lacks the Good Tsar image; seems too young and too delicate; has no regional organizational network, and has not cultivated an image of someone who can work and compromise with others.

• Several others disagreed, Allison outlined the case for Yavlinsky as a long shot, but with a chance of winning the presidency. In his analysis, Yavlinsky could edge out Yeltsin to place second on June 16 and then beat Zyuganov in the second round around July 7. The argument: (1) When Russians ask the Reagan question, "Are you better off than you were four years ago?" 80% answer no; (2) in the December Duma "primary," Chernomyrdin, running for the government, won just 11% of the vote; (3) on Yeltsin's most important campaign promises that voters can see and feel Chechnya and payment of back wages by the end of May, voters will see that Yeltsin failed to deliver; (4) as all the polls show, Yavlinsky is the only candidate certain to beat Zyuganov.

IX. Is Yeltsin the Only One Who Wants to Be President?

• Batanov asserted and several other panelists agreed that only Yeltsin truly wants to be President. Zyuganov is fearful of the position and enjoys his role of opposition leader. Zhirinovsky desires to continue his controversial, high-profile career and seeks to make money from his post. While claiming he wants to be President, Yavlinsky is not ready for it and is preparing himself for a presidential bid in the future.

X. Who Should the Reform Forces Back?

• Without explicitly announcing whom he and Russia's Democratic Choice will endorse, Gaidar's judgment that Yeltsin would conclusively be in the second round of elections suggested his choice.

• Khakamada chose to endorse Yeltsin, albeit reluctantly. In an impassioned speech, she stated, "We are not choosing between the future and the present, but between the status quo and the past. Only the status quo, as imperfect as it is, gives Russia a chance for the future. Our goal at the moment must not be to do better, but to not cause any more harm. In order to do this, we need the rule of law and a subsequent civil society in Russia. Only when we have these items will Russia be able to safely change governments. Therefore, in order to get to this point, I must back Boris Yeltsin."