The appointment of the Primakov government in September represents
more than a change in personalities or a shift in Russian economic
policy. It reflects profound changes in Russian politics, some of
which have serious implications for the United States.

Since its first days in office the Clinton administration has made
"strategic partnership" with Russia a focal point of its foreign
policy. But the administration's interpretation of strategic
partnership has gone far beyond what is conventional in
state-to-state relations. It has included de facto intervention in
Russia's domestic politics on behalf of President Boris Yeltsin and
the so-called "radical reformers", particularly former acting Prime
Minister Yegor Gaidar and former First Deputy Prime Minister Anatoly
Chubais.

Of course, as long as Boris Yeltsin remains Russia's president, he
deserves to be treated with appropriate respect and attention. And it
was only natural that Gaidar's and Chubais' enthusiasm for the
economic prescriptions of the U.S. Treasury Department and the
International Monetary Fund should be appreciated in Washington. But
the Clinton administration has not merely favored Yeltsin and the
radical reformers; it has acted as if their success would, almost by
definition, be good not only for Russia but for the United States as
well. As a result, President Clinton and his advisers have gone well
beyond whitewashing Yeltsin's personal transgressions--including his
excessive drinking and his propensity for grandstanding--and have
consistently urged him to stay on course with radical reform at
almost any cost.

No truly democratic government would ever have dared impose on its
citizens measures as harsh as those implemented by Yeltsin. Despite
this, and after the predictable backlash, the administration endorsed
Yeltsin's unconstitutional dissolution of the Congress of People's
Deputies in 1993, his shelling of the Russian White House (where the
parliament was located), and his virtual imposition of a new
constitution granting the Russian president almost dictatorial
powers. The administration clearly gave priority to its notion of
economic reform over democracy, and to Yeltsin's personal fortunes
over respect for Russia's constitution--and over the obvious U.S.
interest in the establishment of political checks and balances that
would discourage a future Russian autocracy from returning to an
aggressive foreign policy.

Later, in 1996, the administration deployed IMF loans in such a way
as to help Yeltsin win re-election, and then portrayed his victory as
a triumph of democracy. This proclamation came despite the fact that
Yeltsin's campaign team rendered legal spending limits meaningless
through massive violations; used the federal treasury as a campaign
war chest; exploited its de facto control over the media to undermine
not only the Communists but all of Yeltsin's rivals (even Grigory
Yavlinsky, the leader of the impeccably pro-reform Yabloko party);
pressed local officials to deliver the vote to Yeltsin, even through
fraud; and concealed his heart attack on the eve of the election from
Russia's voters.

As a result of its unstinting support of Boris Yeltsin, the
administration developed an enormous stake in his success and the
success of his radical reformer protégés. The appointment of the
Primakov government thus came as a double blow: it came about at the
initiative of opposition politicians in the Duma; and, for the first
time since the collapse of the USSR, the Russian government did not
include any of the administration's favorites.

Not On the Shoulders of Titans

Yevgeny Primakov was appointed prime minister after the humiliating
failures of his two predecessors, Sergey Kiriyenko and Victor
Chernomyrdin. Kiriyenko, dismissed in August, had announced Russia's
de facto devaluation of the ruble, its ninety-day moratorium on the
repayment of debts to foreign creditors (the equivalent of a
default), and its unilateral restructuring of short-term state bonds
(known as GKOs). He replaced Chernomyrdin, who was fired in March to
allow for "new blood."

Despite Yeltsin's claim, however, Chernomyrdin's original dismissal
had little to do with a sense that the Russian government needed new
energy and momentum. While there certainly was such a need, politics
rather than policies played the decisive role. By now it is clear
that Yeltsin and his entourage had become resentful of Chernomyrdin,
who seemed increasingly to be a real second-in-command with an
independent power base and ever more obvious presidential
aspirations. But the Russian prime minister fatally miscalculated
Yeltsin's willingness to tolerate his growing prominence. Whoever
became too visible under the aging and insecure president was bound
to activate his self-protective instincts. With little or no warning,
Chernomyrdin was dismissed in March less than one month after his
return from high-profile meetings with Vice President Al Gore in
Washington.

In retrospect, Yeltsin's decision to fire his prime minister of five
years appears to have been largely spontaneous. This is demonstrated
by the Russian president's initial announcement that he himself would
temporarily assume the duties of prime minister, followed only hours
later by the appointment of the relatively unknown thirty-five
year-old energy minister, Sergey Kiriyenko, as acting prime minister.
Although there have been numerous attempts at after-the-fact
rationalization of Kiriyenko's appointment--highlighting his youth,
competence, commitment to reform, and pragmatic approach to
politics--the mechanics of his arrival make clear that its principal
purpose was to unseat the powerful Chernomyrdin. Kiriyenko, a former
Komsomol leader and then business executive in Nizhniy Novgorod
brought to Moscow by Boris Nemtsov in 1997, had served only a few
months as a minister and was a virtual unknown to Yeltsin.

Kiriyenko's eventual confirmation by the State Duma was predictable.
After two strong but nevertheless pro forma rejections, the deputies
overwhelmingly approved Kiriyenko's candidacy in the face of threats
to force new elections with revised rules unfavorable to the
opposition. Transparent suggestions by the president himself that he
would "take care of the deputies' needs" if only they would cooperate
also helped.

Ultimately, though, the Russian constitution, narrowly approved in a
questionable referendum held after Yeltsin's 1993 assault on the
Supreme Soviet, was the decisive factor. It allowed Kiriyenko to
assume office in an acting capacity prior to his confirmation, and
also ensured that if the parliament rejected Kiriyenko in a third
vote, the Duma would face dissolution. The new Duma, too, would still
have to vote on Kiriyenko, if not a less palatable presidential
appointee. Although the opposition would perhaps have won additional
parliamentary seats if it had forced new elections, the Duma has so
little power that the opposition's strength is of little relevance if
Yeltsin feels confident enough to ignore the legislature. Yeltsin had
also put opposition leaders on notice that he might abolish by decree
the current system of proportional representation in any new
parliamentary elections. This would significantly damage the smaller
parties, particularly Yabloko, which has a substantial nationwide
electoral base but could win few races in single-mandate districts
outside Moscow, St. Petersburg, and a few other major cities. Because
the Duma would be unlikely to vote for such a change, Yeltsin could
probably not have introduced it constitutionally--but with his record
of acting outside the constitution, his threat had enough credibility
to sober the opposition into submission.

Kiriyenko won almost instant endorsements from the Clinton
administration and the IMF. Their quick support for the new prime
minister could hardly have been based on his reformist record--he had
served as a cabinet minister only since the previous November, when
he replaced his political mentor, Boris Nemtsov, as energy minister.
Nor was Washington's satisfaction based on any displeasure with
Chernomyrdin, with whom the administration had worked amicably for years.
Instead, the fulsome praise for the new Russian government seemed
to reflect the Clinton administration's predisposition to find
something positive in almost any move taken by Yeltsin on one hand
and, on the other, its trust in assurances from Nemtsov and former
First Deputy Prime Minister Chubais, whom Yeltsin had just appointed
to head Russia's electricity monopoly, United Energy Systems of
Russia. The fact that another radical reformer--Yegor Gaidar--was a
key unofficial adviser to the Kiriyenko team also reassured the
administration and its proxy international financial institutions.

The near euphoria in Washington was, however, totally divorced from
realities in Russia. Once Kiriyenko was confirmed, Yeltsin lost his
leverage over the Duma, which by then was deeply resentful at having
been railroaded into approving the young appointee. It was thus very
unlikely that the Duma would cooperate with the new radical reform
government and, without crucial legislation, the government was
unable to implement significant new policies. The new government,
even more than previous ones, was forced to turn to reform by decree.
But this failed to assuage the concerns of skeptical foreign
investors, undermined the legitimacy of the political system still
further, and did little to improve Russia's economic condition.

Thus, despite their monetarist rhetoric--which fell on enthusiastic
ears in the U.S. Treasury Department and the IMF--Sergey Kiriyenko
and his team had no realistic economic program. The government could
not simultaneously rationalize Russia's tax system and respond to IMF
pressure to improve tax collection, even though the latter was
objectively necessary. This was especially true as the drive to save
money by whatever means possible, including forced cuts in the
country's social safety net and the non-payment of wages and pensions
for months, further strained the government's relations with the
State Duma. That in turn made the necessary tax legislation even less
likely, because many deputies, including those committed to reform,
perceived tax collection efforts--such as widely publicized raids by
hooded tax inspectors armed with automatic weapons--as either
arbitrary or politically motivated attacks on opponents of the
government and its allies. Pressure to increase tax receipts also
stifled the development of Russia's cash-starved businesses and
scared off foreign investors, whom Moscow often saw as an easy source
of additional revenue. But in an economy in which about 60 percent of
cash turnover occurs beyond the reach of tax authorities in the
shadow economy, and in which 75 percent of transactions take place
through barter--a new tax system was of much more fundamental
importance than an improvised, one-time improvement in tax gathering.
As in the case of Gaidar's government, the Kiriyenko government
(which Gaidar advised) proceeded in a cavalier fashion with hastily
conceived radical measures implemented in an authoritarian style. It
never developed a systematic approach to what is, after all, a very
complex problem.

Chaos and Collapse

Russia's financial collapse was a logical result of the policies of
the Chernomyrdin and especially the Kiriyenko governments, which had
relied heavily upon foreign borrowing to sustain federal budget
expenditures. As oil prices continued to fall and Western investors
simultaneously began to pull money out of Russia to cover their
losses in the Asian financial crisis of 1997, the Russian government
was forced into greater borrowing at escalating interest rates. GKOs
were offered at such high rates of interest--up to 150 percent when
inflation was still at a relatively low level--that there was little
incentive for Russia's banks, or investors in general, to put money
into production. Without that investment, however, there could be no
growth in income to allow for the repayment of Russia's mounting
debts. At the same time, it became increasingly expensive for the
government to support the overvalued ruble. The result was a typical
pyramid scheme. When the Kiriyenko government was finally forced to
devalue the ruble, it found that it--and Russia's banks--could no
longer meet their international obligations.

Key radical reformers, including Chubais, have admitted to
understanding what was happening and what the likely consequences of
Russia's economic policy manipulations would be. Nevertheless, in the
best Russian tradition, they hoped against hope that somehow,
something would happen to resolve the crisis--or that the Clinton
administration and the IMF would again step in to offer a way out.
But it was too late. The resulting chaos and collapse of the ruble
led quickly to the further decline of Russia's GDP, a new wave of
inflation, consumer hoarding and shortages, unemployment, and
accelerated capital flight. The fact that a reformist government that
enjoyed particular confidence in the West took such drastic measures
and produced such dire results compounded the damage to Russia's
international credibility. Chubais' admission that he and the Russian
cabinet deliberately deceived the IMF and foreign investors alike
about the weakness of the Russian economy delivered a further blow.

Chubais later maintained that while he and his colleagues in the
Kiriyenko government misled foreign investors, they did not
deliberately lie to the IMF. This Clintonesque denial is not without
a certain element of credibility. IMF and particularly World Bank
officials in Moscow were quite skeptical of Russian assurances. After
having my own conversations with then Central Bank Chairman Sergey
Dubinin and Deputy Prime Minister Boris Nemtsov, I was convinced that
devaluation was inevitable and that only Russians' traditional faith
in miracles gave the Kiriyenko government hope that it could be
avoided. It appeared that senior Russian officials felt that they had
no alternative but to delay devaluation until after the announcement
of the July IMF credit package in order to fulfill the expectations
of the Clinton administration's top decisionmakers on Russia policy,
Deputy Secretary of State Strobe Talbott and Deputy Secretary of the
Treasury Larry Summers, who were eager to maintain the façade of
Russian economic progress. This was more a mutually agreed pretense
(undertaken to avoid alarming the U.S. Congress) than it was a
unilateral deception.

The bubble predictably burst, but not until the first $4.8 of the
$22.6 billion IMF-led bailout announced in July had been wasted
supporting the value of the ruble and protecting Russia's top banks,
which were controlled by the country's new oligarchy. There was much
finger-pointing; many, including the IMF and President Yeltsin,
claimed to be "shocked, shocked" at the collapse.

When Kiriyenko was fired, most in Moscow seemed to assume that the
candidacy of Victor Chernomyrdin would sail through the Duma.
Chernomyrdin had the support of most of Russia's oligarchs--including
Boris Berezovsky, who took public credit for the appointment--and, in
addition to being on fairly good terms with Communist leader Gennady
Zyuganov, he was generally acceptable to the country's regional
leaders. Two regional governors with presidential ambitions of their
own--Moscow Mayor Yuri Luzhkov and Krasnoyarsk Governor Alexander
Lebed--also offered important early support.

According to Moscow political analysts, another strength of the
former prime minister's candidacy was that despite having been fired
by Yeltsin, he could be counted on to protect the president's
interests. This triggered speculation that Yeltsin's declining
physical and mental health might lead him to cede some power to the
prime minister and possibly even to the parliament. Yeltsin's
entourage signaled as much in preliminary discussions with Duma
officials. Soon, however, the Russian president demonstrated--as he
had many times before--that unless pushed into a corner he would not
compromise his personal power, and that no redistribution of
authority could take place until he stepped down or was
incapacitated. The Duma was thus being asked to confirm Chernomyrdin
in a situation in which--given his strong presidentialambitions--he
could first protect Yeltsin and then inherit his broad powers. Not
surprisingly, the Communists and a number of other factions quickly
backed away from supporting Chernomyrdin on those terms, and his
prospects for confirmation collapsed.

Yevgeny Primakov's appointment as prime minister after the Duma's
rejection of Chernomyrdin avoided a new sharp confrontation between
the president and the parliament. Had Chernomyrdin been rejected a
third time, Yeltsin would have been bound by the constitution to
dissolve the Duma. However, because the Duma was planning to initiate
impeachment proceedings against Yeltsin--which, according to the
constitution, would prevent its dissolution--the situation could have
resulted in a constitutional crisis. Such a crisis would have been
much worse than that of October 1993, as no one would have been sure
what the demoralized, divided, and underpaid Russian military--or
Russia's increasingly assertive regional governors--would have done
during such a standoff. Moreover, Yeltsin's options were severely
limited by his unprecedented unpopularity after the August financial
collapse.

This was a part of the rationale for the suggestion of Primakov as a
compromise candidate by pro-reform economist and Yabloko faction
leader Grigory Yavlinsky. He and others in the Duma were also
delighted to demonstrate that the legislature could no longer be
ignored. But Yavlinsky refused to join in the government once it
became clear that it would be an eclectic coalition representing a
variety of approaches. Included in it were Gorbachev-era officials
such as Yuri Maslyukov, a former head of the Soviet planning agency
Gosplan, and Victor Gerashchenko, a former Soviet banking official
who served as the first chairman of Russia's Central Bank.
Embarrassingly, two members of the pro-Chernomyrdin Our Home is
Russia party also refused to serve after being appointed publicly by
Yeltsin: Duma Deputy Speaker Vladimir Ryzhkov and the faction's
leader in the Duma, Alexander Shokhin, who joined the government only
to resign after a few days. This made it more difficult to assume
that the Primakov government could rely upon the support of reformers
in the parliament.

Since Primakov came into office without a program or a background in
practical economics, his disjointed cabinet has had considerable
difficulty developing a coherent economic package while the Russian
economy continues to decline. The good news, though, is that since
Primakov was appointed through a compromise, there has been no
immediate strong opposition to him. Fearing a further unraveling of
the situation, most major political figures, including Mayor Luzhkov
and Governor Lebed, have offered the new prime minister their
support. At the same time, the Duma's role in Primakov's selection
has given the new prime minister greater freedom from Yeltsin's
destabilizing meddling than any of his predecessors enjoyed.

Simultaneously, the Russian people--tired, confused, and preoccupied
with their own survival--appear to be in no mood to start a new
revolutionary uprising. But Russian revolutions have often started in
spontaneous and unpredictable revolts. In a nation with a
constitutionally powerful but personally weak president and a
disaffected, disillusioned population, even a fairly limited
rebellion could start a chain reaction, especially if the fragmented
Primakov government cannot find a way to halt skyrocketing inflation
and limit shortages.

To their credit, no important Russian political party--including the
Communist Party and Vladimir Zhirinovsky's Liberal Democratic
Party--has adopted the Bolshevik slogan of 1916-17, "the worse, the
better", and bet on victory through social upheaval. Curiously, the
radical reformers have come the closest to adopting this position,
through Chubais' apparently calculated admission of hoodwinking the
IMF and Boris Fyodorov's call for no further IMF assistance to Russia
immediately after the failure of his own attempt to remain in the
cabinet.

In many countries, certainly most democratic countries, a crisis of
the magnitude of the August-September 1998 events in Russia would
have resulted in a comprehensive change of leadership. But in Russia,
where Yeltsin is a declining czar rather than a hands-on chief
executive, a change of government may do if Primakov and his aides
are able to avoid completely alienating foreign investors and cutting
off Russia from most international assistance. It is also possible if
the situation continues to deteriorate that Primakov may be able to
reshuffle the government and include responsible reformers in key
positions.

The good news about the Primakov cabinet, as Secretary of State
Madeleine Albright has observed, is that "Russia now has a government
with a mandate from both the parliament and the president." While the
inclusion of ministers associated with the Communist and Agrarian
factions in the government makes it more difficult for the cabinet to
develop a coherent pro-reform program, to the extent that it is
possible to do so such a program may garner more support in the Duma
than any previous government initiative. At the same time, because
the Duma can no longer excuse its obstructionism by pointing to the
contempt with which the executive treats it, it finds itself under
pressure to cooperate constructively with the cabinet. This creates
an opening for economic change to be implemented through legislation
rather than less credible presidential and government decrees--if the
Primakov team manages to get its act together.

In the long run, the success of this dialogue is important to
establishing a viable democratic system in Russia. More immediately,
it may be essential in avoiding a social explosion. Much is at stake
here for both Russia and the world; while new turmoil is possible but
still not probable, its consequences could be so profound that trying
to avoid--or at least not to facilitate--such upheaval should be a
priority for the United States in dealing with a Russia on the brink.

The American Stake

In this context, it was appropriate for Secretary Albright to advise
against "taking a census of reformers in the Kremlin." Still, the
secretary of state could not resist the temptation to do precisely
that by expressing doubts about the Primakov government, saying, "We
can only wonder if some members of Primakov's team understand the
basic arithmetic of the global economy." She was similarly unable to
conceal her disappointment that America's radical reformer protégés
were no longer in government.

As the secretary also said, though, Primakov is "a forceful,
straight-talking advocate of a major power's national interests." The
new Russian prime minister has a long record of dealing with the
United States as an adversary during the Soviet period as well. But
attempts by some to demonize him as an anti-Western Arabist or a KGB
agent are an oversimplification. First, even if he had worked for the
old KGB, he would have been employed in a foreign intelligence
capacity--not as a political policeman. Given that Yeltsin himself is
a former party apparatchik, it is hypocritical to become exercised
over the new prime minister's old KGB contacts.

Second, and more to the point, it is clear that while a person with
Primakov's illustrious career had to have close ties to the KGB, it
is very unlikely that he was ever a staff officer. If there were any
firm institutional rules in the post-Stalin Soviet Union, one was
that the party was above the security services and, therefore, that
party personnel could not work for the KGB. As a correspondent for
Pravda, the official party newspaper, in Cairo in the 1960s, Primakov
was a part of the Central Committee nomenklatura. Because he was
directly supervised by the International Department of the Central
Committee, it would have been highly unusual for him simultaneously
to take orders from the KGB. Lieutenant General Vadim Kirpichenko, a
retired first deputy chief of foreign intelligence for the KGB,
confirmed this in a recent book, where he wrote that Pravda
correspondents such as Primakov maintained "close professional
contacts" with KGB station chiefs but "could not be engaged for
cooperation."

Primakov's appointment, like so much else, seems to have taken the
Clinton administration off guard. In all likelihood this was not a
result of dark suspicions about Primakov personally; after all,
Secretary Albright and others in the administration know him well
and, despite obvious disagreements, feel that they can do business
with him. The real problem for the administration is that because the
Primakov government came into power as a result of a compromise
between Yeltsin and the parliament, it has enjoyed greater autonomy
than any previous Russian cabinet and has been much more
representative of opinion in the Duma and in Russia in general. As a
result, it is less interested in guidance from Washington than were
Yeltsin's protégés among the radical reformers.

For years the Clinton administration has paid lip service to the
importance of promoting democratic reform in Russia. Its policies of
promoting strict monetarism and crony privatization, however, have
actually frequently worked in the opposite direction by limiting
economic growth and the development of a legal framework for a free
but regulated market. Almost since its inception in late 1991,
radical economic reform has triggered a strong popular backlash in
Russia. Sensing public opinion, sizeable majorities in both the old
Congress of People's Deputies and the Duma have consistently opposed
radical reform.

Despite this opposition, Yeltsin was in a position to ignore the
legislature and appoint governments of his own choosing responsible
only to himself. This was particularly true after the adoption of the
December 1993 constitution, which provided him with enormous powers.
However, the Russian president was able to ignore parliament only at
the double cost of further polarizing Russian society and encouraging
obstructionist behavior by the Duma.

Nevertheless, the Clinton administration consistently urged Yeltsin
to follow U.S. Treasury and IMF recommendations no matter the social
and political consequences. This encouragement--backed by detailed
conditions established for IMF credits--often went beyond policy
advice to include not-so-subtle suggestions about which specific
individuals should occupy key positions in the Russian cabinet and
even on Yeltsin's personal staff. According to knowledgeable Russian
sources, President Clinton himself coached Yeltsin on several
occasions about the importance of retaining such administration
favorites as Chubais and former Foreign Minister Andrei Kozyrev in
the government. The administration thus put its desire to influence
the Russian president's policies above the development of democracy
in Russia. At the same time, the administration's strict adherence to
its own somewhat arbitrary vision of what constituted reform in
Russia actually undermined the economy's prospects for growth. The
continuing lack of legislation became a serious obstacle to foreign,
and even domestic, investment; few investors were willing to commit
their money in the absence of a reliable legal framework. The
deadlock between the government and the Duma was similarly an
obstacle to tax reform--another problem that must fall to solution if
Russia is ever to put its financial house in order.

The failure to attract investment and to raise tax revenues made
Yeltsin uniquely dependent upon the good will of the outside world,
particularly the United States, which was rightly seen as having a
decisive influence over IMF lending decisions. As a result, there are
now strong suspicions in Russia that Washington deliberately sought
to keep it on its knees by forcing it to accept destructive economic
policies. While there is no evidence that the Clinton administration
was either capable or desirous of so Machiavellian a policy, senior
administration officials certainly must be aware that,
notwithstanding the rhetoric of partnership advanced by both sides,
there could be no genuine equality in the relationship between a
powerful donor and a beleaguered recipient.

Primakov's Prospects

In contrast to its rhetoric, deep down the administration has also
acted as though it shared Henry Kissinger's observation that, "In
Russia, democratization and a restrained foreign policy may not
necessarily go hand in hand." In fact, President Clinton and his
advisers supported Yeltsin not only because of naive romanticism, but
also because of a perfectly pragmatic--if shortsighted--calculation
that he was prepared to subordinate Russian foreign policy interests
to Western, and especially American, preferences to a much greater
extent than the parliament or the Russian public at large. For
example, it is hard to imagine that a Russian government responsive
to popular sentiment would have sent military units to serve under
NATO command in Bosnia, as Yeltsin did, when NATO launched air
strikes solely against Orthodox Serbs despite strong Russian claims
that each of the parties in the conflict had committed excesses.
Similarly, it is unlikely that such a government would express
willingness to participate in the international monitoring effort in
Kosovo essentially on NATO terms.

The underdevelopment of democracy in Russia and the resulting broad
autonomy of the Russian president have thus helped the Clinton
administration to win Moscow's acquiescence to U.S. foreign policy
actions that it may otherwise have strongly opposed. From this
standpoint, the emergence of the Primakov government, which relies on
parliamentary support from the Communists (among others), was bound
to make the administration think twice. Administration officials were
forced to ask how the new Russian cabinet would respond if the United
States were to take the lead in organizing a NATO air campaign
against Serbia in response to Slobodan Milosevic's brutalities in
Kosovo. Use of the Russian UN Security Council veto became a real
possibility for the first time in years. It was by definition much
easier and more predictable to make arrangements with only Yeltsin
and his lieutenants.

Similarly, the Primakov government is likely to be less open to U.S. Treasury and IMF guidance on how to manage Russia's economy. Taking into account how deeply flawed that advice has been thus far, this may to some extent be a blessing. It has also already become clear that the Primakov government has had great difficulty putting together an economic program; the new prime minister has emphasized several times that he is not a magician. His is not a cabinet looking for bold new approaches - whether toward or away from the free market through large-scale re-nationalization. Muddling through is the best one can realistically expect from his cabinet - and even that will not be easy.

Russia's new government has inherited a banking system near collapse, spiraling inflation, negative economic growth (a 5-6 percent decline in Russia's GDP is projected by the Russian Central Bank for 1998), and severely undermined investor confidence. Some $17 billion in debt is due in 1999 and there is no chance that Russia will be able to raise sufficient revenue to avoid - to put it delicately - restructuring its obligations. It is clear that difficult economic times are still ahead and that conditions will become worse before they get better.

Nevertheless, on the positive side, key members of Primakov's economic team, including Central Bank Chairman Victor Gerashchenko, First Deputy Prime Minister Yuri Maslyukov, and Finance Minister Mikhail Zadornov, are all pragmatic and competent professionals. They are capable of heading off disaster or, at a minimum, of adjusting their policies if disastrous consequences become evident. Moreover, the government's relationship with the Duma may allow the passage of long overdue legislation on property rights, bankruptcy, tax reform, and other key issues. Like the Primakov cabinet itself, that legislation is bound to be imperfect, contradictory, and disappointing to many. But it would still be a modest step in the direction of rebuilding sagging investor confidence.

As the relatively mild demonstrations on October 7 suggest, the government's ties to the Duma will also be helpful in avoiding social upheaval. Given that one of the most essential - if not the most essential - U.S. interests in Russia is the avoidance of anarchy or civil war in a nation with thousands of nuclear warheads, whatever contribution the new government makes to reducing that likelihood should be welcome.

Relatedly, it is important to recognize that the Primakov government may smooth the transition to the post-Yeltsin era as well. Yevgeny Primakov has several advantages in this respect. First, he is on good terms with both Yeltsin and the opposition. Second, he is a master of political maneuver and a skillful survivor. Third, and perhaps most important, because he has no constituency of his own - and no known presidential ambitions - he is generally viewed as a caretaker. This perception helps significantly to calm tensions in a period when Yeltsin - while maintaining both his enormous constitutional powers and his strong attachment to them - is increasingly unable to exercise effective leadership.

Solutions to Russia's broader problems will have to await new elections to the State Duma in 1999 and for the presidency in 2000. But, for the first time, the Communists and their allies may be forced to bear some of the responsibility for the Russian government's policies. Should the government go too far in implementing retrograde policies under pressure from the Communists, pro-democracy and pro-reform parties in the parliament, such as Yabloko, may have an important opportunity to increase their electoral appeal and exercise greater influence on the government (or even join it).

Still, even assuming that Russia can muddle through until the post-Yeltsin era, the United States will have to accept that Moscow's willingness to walk in lock step with it on foreign policy matters is increasingly a thing of the past. Russia's limited resources and continuing dependence on the West will of course discourage any responsible government from confronting America over issues that are not vital to Russia, including Kosovo and Iraq. But if a perception of hostile American intentions begins to guide Russian foreign policy, attempts to counteract U.S. policy would likely follow even before Russia regains its feet economically.

It is not easy for Americans, particularly in our current triumphalist mood which has been only slightly dented by the impact of the global economic crisis - to appreciate the perceptions that U.S. conduct is generating in Russia. American actions such as NATO enlargement, resistance to Russian influence over pipeline routes out of the Caspian Basin, efforts to discourage Russia from sharing weapons and high-technology with those who do not play by the rules internationally, and the imposition of strict conditionality on international economic assistance to Russia make sense individually on their merits. But collectively these policies contribute to a widespread impression that the United States is deliberately exploiting Russia's historic vulnerability. These steps have been seen by some as the aggressive expansion of a hostile military alliance, an attempt to restrict Russian access to key oil resources and lucrative investments, an effort to monopolize the international arms and technology markets, the hypocritical use of military force against Russia's Serbian friends, and, through offering assistance on conditions that prevent economic growth in Russia, a policy intended to keep the country weak and dependent upon the West.
But that is beside the point. What matters is whether Russian public opinion sees U.S. policy as an effort to bring Russia to its knees - and increasingly it does. Also, while the administration cannot be accused of deliberately undermining Russian reform, it was not above taking advantage of Moscow's continuing weakness - to which its policies contributed - to marginalize it on a variety of international issues. With regard to NATO air strikes against Yugoslavia, for example, Secretary Albright said, "If force is required, then we will not be deterred by the fact that the Russians do not agree with that." Such an attitude, and the behavior resulting from it, only contributes to the development of a "Weimar Russia" psychological syndrome, the avoidance of which must be a priority for U.S. policymakers.

That syndrome will only be enhanced if the administration opts for pre-emptive abandonment of Russia, out of a combination of fear and self-righteousness not dissimilar to that with which some of its members once advocated pre-emptive appeasement of the Soviet Union during the days of Moscow's imperial glory. Despite the rhetoric of continued engagement, Strobe Talbott suggested recently that Washington might wash its hands of Russia unless the Primakov government agrees to follow IMF guidance. Strikingly, Talbott's remarks lacked any reflection about the U.S. role - and his personal complicity - in Russia's predicament. Moreover, he knows that Primakov could not deliver on this demand without provoking a major conflict with the Duma; that a large part of a second IMF loan installment would be used to repay previous ill-conceived IMF loans (for which the administration cannot escape responsibility); and that the consequences of a collapse in Russia far surpass the danger of wasting $4.3 billion. Talbott's remarks appear to be either a reflection of indignation at Russia's refusal to follow his advice, an attempt to create an alibi in the event that the administration finds itself in a "Who lost Russia?" debate, or possibly both.

It may be difficult to focus on Russia's long-term potential to assume a major role in the international system when the country is seemingly trapped in an almost catastrophic economic crisis. Russia today is in a uniquely weak international position; its military is not ready for combat and its economic ordeal clearly reduces its options in foreign policy significantly, and Russians recognize this. A Russian proverb describes their understanding of the current situation: ne do zhiru, byt' by zhivu (do not worry about getting fat when you are struggling to stay alive).

But it would be a mistake for the United States to interpret Russia's current weakness as endorsement of America's effort to shape a new international system around itself. Russia is biding its time until it is able not only to express its preferences but also to do something about them. While it may be some time before Russia can significantly constrain American foreign policy, approaching the country realistically means recognizing that it may have a much more serious impact on the world a few years hence.

In this context, National Security Adviser Samuel R. Berger was wrong to claim that NATO air strikes against Serbia would not "affect [America's] fundamental relationship with Russia." At the present time, when Russia is exceptionally weak and is desperate for foreign assistance (ranging from the next tranche of the July 1998 IMF credit package to food aid from Europe and the United States), Moscow does have limited options in responding to whatever NATO does in Yugoslavia. But there will be a reaction sometime, somewhere - and perhaps on a matter of greater importance to America than events in Kosovo. Accumulated scar tissue on the Russian side from such perceived indignities will hardly add to the strength of what the administration has called one of America's most important bilateral relationships.

Nevertheless, it is true that under even the most optimistic scenarios for Russia's economic recovery, Moscow cannot regain its lost superpower status in the foreseeable future. And most serious presidential contenders - including Yavlinsky, Luzhkov, Lebed, and even Zyuganov - appreciate the unique role of the United States in today's world and understand that needlessly alienating Washington could have devastating consequences for their country. Thus, a great deal will depend on American policy toward Russia and, more generally, on U.S. global strategy in the twenty-first century. Russia alone is not likely to be able or willing to mount a serious challenge to American predominance. Likewise, there is no potential for Russia to become the focal point of a new coalition against the United States - although it could facilitate such an effort by others.

Thus, Russia could become a serious problem for the United States if the Clinton administration continues to try indiscriminately to run the world according to American preferences while still failing to take tough stands when it really counts. Such irritation without intimidation is very likely to generate a Russian backlash against U.S. global leadership, and this could be the case regardless of who replaces Boris Yeltsin.

Dimitri K. Simes is president of The Nixon Center. This article is based in part on his forthcoming book, After the Collapse: Russia Seeks Its Place as a Great Power, to be published by Simon & Schuster early in 1999.