RUSSIA - Part 4 - The Decision Makers

None of Moscow's decisions would be definitive, as the Russian Federation is in transition from a Communist empire that collapsed in late 1991 to what a prominent Russian intellectual calls "the unknown". The nation, deeply divided, is in its worst economic crisis. Most Russians under 45 favour reforms. The older ones, the majority in an aging nation, want a combination of nationalism and socialism. Communists and nationalists dominate the lower house of parliament, Duma, while an erratic ruler is trying to save his presidency.

Almost seven years of reforms demanded by the West and counter-measures imposed by the Duma have produced a crisis which Stephen Cohen, professor of Russian studies and history at New York University, depicts as follows: "So great is Russia's economic and thus social catastrophe that we must now speak of another unprecedented development: the de-modernisation of a 20th century country". In an article published by the 'International Herald Tribune' on Aug. 21, 1998 - four days after Moscow let the rouble fall and froze a $40 bn domestic debt - Cohen said: "Treating Russia's agony as merely a matter of bolstering a faltering stock market, banking system and currency with more budgetary austerity and tax collection, ruble devaluation and Western financial bailouts - is like rearranging deck chairs on the Titanic... Even if economic growth were miraculously to resume, Russia would need decades to regain what it has lost in the 1990s, and nothing can retrieve the millions of lives already cut short by the 'transition'".

The Global Perspective: The Russian crisis took a disastrous turn after the financial meltdown in Asia led to a change of government in Japan - with the Suharto ruling family having fallen in May and half of Indonesia's 200m population having sunk below the poverty line, among other things elsewhere - and assumed global proportions. Now the Russian crisis is adding much to the problems of Asia and has affected Latin America and Europe, with persistently low oil prices having dragged down the economies of most oil exporters. In the past week, stock and bond prices in Venezuela plunged amid fears the country might be forced to devalue its currency. The Madrid market was severely shaken by the fall, as Sao Paolo tumbled, Buenos Aires retreated, and Santiago and Mexico plunged into volatility. Some West European markets plunged as well. People say Venezuela is another Russia and doubt that the Aug. 28 meeting of the Saudi, Venezuelan and Mexican oil ministers will lead to a sustainable rise in oil prices. Low oil prices are delaying a spill over of the Asian, East European and Latin American crises to the North American and West European economies.

As a global economic deadlock seems to be in the offing, the world's political perspective does not encourage investors. Osama Bin Ladin - an Islamic

terrorist trained by the CIA, stripped of his Saudi nationality and targeted by the US as prime enemy - is one of the "American Frankenstein's monsters". He and the other monsters may not give Bill Clinton, the US president, lasting relief from his Monica Lewinsky nightmare, while Israel's Likud Premier Netanyahu keeps the Arab-Israeli peace process stalled. Saddam Hussein will make sure that both Netanyahu and the monsters will not stop fanning the fires in a Muslim world of more than 1.15 billion (see News Service of this week's APS Diplomat).