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Russian Cabinet Resigns as Government Crisis Worsens

By Carey Goldberg
Los Angeles Times

MOSCOW

The Russian Cabinet formally submitted its resignation to President Boris N. Yeltsin and stalked wrathfully out of the national Parliament on Monday in an explosive governmental crisis that ministers said threatened to wreck the country's economic reforms.

Yeltsin had yet to accept the resignation -- the first by a full Russian Cabinet since before the 1917 Bolshevik Revolution -- and lawmakers said there was still a good chance that a compromise could be worked out to make the Cabinet change its mind.

But the war of wills between ministers and legislators nonetheless amounted to the most volatile political clash the Russian president has faced since he began his economic reforms last winter. And it exposed fierce behind-the-scenes battles between the branches of government that, officials worried aloud, could stymie the reforms themselves.

Yegor Gaidar, Yeltsin's brash, 36-year-old economics chief, warned that Parliament, by making irresponsible economic decisions, would bring on "a catastrophic decline in living standards, famine, social upheavals, and chaos."

The Cabinet refuses, he told a news conference, "to follow the path of irresponsible populism."

Lashing back at Gaidar, Speaker Ruslan Khasbulatov accused the Cabinet of trying to blackmail the Congress of People's Deputies, which, as the national super-parliament of more than 1,000 members, is theoretically the highest governmental body. Habitually sharp-tongued, sarcastic, and condescending, Khasbulatov went a step too far this time.

In a jibe at the youth of the economists in the Cabinet, Khasbulatov sneered: "The boys just lost their cool." At that, in some of the liveliest theatrics ever to hit the normally somnolent Congress, the two dozen government ministers arose en masse and stormed out of the white-columned hall, leaving Khasbulatov to adjourn the session and some 150 pro-Yeltsin deputies to discuss their own plans to boycott the Congress if it did not come around.

Khasbulatov later apologized on national television, saying he "didn't mean to insult anyone," but the damage was done.

Several ministers predicted that Yeltsin would take the floor Tuesday to foster a compromise. Probably, they said, it would be based on a formula proposed Monday that would defuse the immediate crisis by creating rules for solving disputes over fiscal issues between Parliament and the Cabinet.

Although its roots lay deeper, in the unclear division of power between parliament and the Cabinet, the current dispute arose over a resolution on economic reform that the Congress passed Saturday.

Trying to please the constitutents whose standard of living has dropped sharply since the government freed prices in January, deputies voted that savings bank accounts should be indexed to inflation, government employees paid as highly as industrial workers, and agricultural subsidies increased dramatically.

They also gave Yeltsin just three months to come up with a law on the organization of the Russian government -- after which his interim special powers to rule by decree would run out -- and to nominate a candidate to replace him as prime minister.

Yeltsin's Cabinet, horrified at what it contends will mean the end of its reform program, fought back Monday with an alarmist memorandum estimating that if the Congress gets everything it wants, it will swell the government's budget deficit to 1.5 trillion rubles, which would amount to 23 percent of the gross national product.

That, in turn, the memo predicted, would fling the country into hyperinflation at a level of 2,000 percent a year, and consumers' buying power would plummet to one-fifth what it is now.

Furthermore, ministers warned, if the West believes that the economic reform program may be radically altered, it may renege on the billions of dollars in aid it had promised, including the latest package of $24 billion.

In Washington, a Bush administration official offered a blunt warning to the Russians:

"We don't want to tell them what to do," he said. "But if they do things counterproductive to establishing a reliable economic program, we're not going to sink taxpayer dollars into a likely loser."

The official, who spoke on condition of anomymity, said the administration was watching the development carefully and was "not yet alarmed."

"The fact the Cabinet threatened to resign over the apparent attempt to gut the economic program by the Congress of People's Deputies underlines that the Cabinet is serious about economic reform," he said.

"Yeltsin is a political survivor, and a good politician has the capability of coming out of this with what he wants and support for his program," the official added. But, he said, "if the Congress of People's Deputies should succeed in gutting the economic program, that would be a very bad sign and would place in jeopardy the package of economic assistance we put together."

He continued: "It is possible Yeltsin will win the day and explain to them the importance of staying the course."