Gaidar defends the free market: Russia's reforming Prime Minister faces down a raucous reception in Congress but fails to win over the critics of his monetarist policies

IGNORING the jeers of old Communists in the Congress of People's Deputies, Russia's youthful Prime Minister, Yegor Gaidar, yesterday made a spirited defence of his reform programme and urged the nation to trust him a little longer on the difficult path to the free market.

But later in the day Vice-President Alexander Rutskoi, a leader of the centrist Civic Union, challenged the government, calling for a coalition to manage the country and for more state control of the economy. 'We cannot abandon regulation and management,' he said. 'The government should stop using the slogan, 'Either us or back to Communism'.'

Mr Gaidar was given a raucous reception at the morning session of the Congress, elected before the collapse of Communism, but he gave as good as he got, telling MPs whom he finds obstructive that Russia no longer has the luxury of being able to talk endlessly about reform. 'We are not in a public square where we can discuss ways to a bright new future. We are following a very narrow path and only steady steps can take us out of the crisis. It is easy to lose hold if we do not work constructively and responsibly.'

The Prime Minister said it was a big achievement simply to have launched reform in a country stifled by more than 70 years of Communism, the more so since the mass unrest predicted when prices were freed in January had not materialised. Privatisation had been started and 40,000 enterprises would have been sold by the end of the year. Russia had also had most of its debts to the West deferred and been granted credits of dollars 14bn to buy grain and medicines.

Mr Gaidar admitted there had been mistakes and setbacks, the gravest being inflation verging on hyperinflation, which he promised to deal with as a priority. The Prime Minister had been sticking to a tight monetarist policy until the summer, when the Central Bank got a conservative governor who gave fresh credits to lame- duck state industries, causing the rouble to plunge. But Mr Gaidar took the blame himself instead of criticising the bank chief in public.

Government plans included extending regional autonomy, stimulating investment and converting military plants to civilian production. A large part of Russian industry is geared to defence and Mr Gaidar tried to woo the 'military-industrial complex' by promising that arms sales would continue to 'reliable partners. We are not going to supply arms to conflict zones but at the same time there is no reason for withdrawing from this important market.'

Deputies were not enthusiastic after the speech. The liberal Mayor of St Petersburg, Anatoly Sobchak, praised Mr Gaidar but the hardliners expressed disgust. 'The opposition will be even keener for Gaidar's ouster after this speech,' said Vladimir Isakov, a fierce critic. 'Gaidar has shown that all the talk about compromise was just a pre-Congress masquerade.' Viktor Sheinis, of the Consensus for the Sake of Progress faction, said: 'Gaidar's report was very well reasoned but unfortunately it was made at too high an intellectual level and I fear some of the deputies didn't get the gist of what he was saying.'

Mr Rutskoi, speaking in the afternoon, effectively presented an alternative programme, calling for a coalition of 'reform-minded leaders' who would focus more on social welfare and give greater support to state industry in the transition to capitalism. He implied Mr Gaidar was too eager to please the West and the IMF.

A survey of the views of the 1,040 deputies indicates that 12 per cent actively support the government, 25 per cent are dead against Mr Gaidar and the rest are undecided. Before the Congress opened, President Yeltsin strongly backed Mr Gaidar but in his speech on the opening day he spoke of a 'golden mean' between market and state, suggesting he might make concessions. The Congress will now debate Mr Gaidar's performance and, if it does not give him a mandate to continue, Mr Yeltsin will have to nominate a new prime minister.

(Photograph omitted)