Zyuganov unveils economic cure

While much of Russia is still dazed by the gall of Boris Yeltsin's pre-election attempt to resolve the Chechen crisis, economists have turned to another highly touchy issue: what would happen to Russia's economy if the Communists took control of the Kremlin?

This week their economic plan was published, to be overshadowed by the Chechen ceasefire and then by Mr Yeltsin's trip to the republic while the rebel leader, Zelimkhan Yandarbiyev was, in effect, held hostage in Moscow.

But now the excitement has begun to fade and the economic strategy of Gennady Zyuganov and his Communist-led National-Patriotic bloc is under fire from those who fear it will destroy the patchy achievements of Mr Yeltsin's economic reforms, notably a stable rouble and falling inflation (1.6 per cent for May, according to government figures). The stock market may be booming but warnings abound of capital flight and plummeting foreign investment.

The plan, "From destruction to creation, Russia's path into the 21st century", describes a three-stage strategy to revive the "catastrophic" economy, creating growth and increased social spending. It contains few of the red rags to the bullish reformers that some predicted. It talks of a "multi-layered economy" rather than a return to Soviet-style central planning or full-scale renationalisation.

But there is protectionism and plenty of intervention. The document envisages creation of a government of "national trust" which would lower some prices (such as oil and gas) and invest directly in some sectors of the economy. Higher import tariffs would defend revived domestic industries, with measures to halt capital flight, guarantee savings, and social programmes which would help boost spending. By the close of stage three of the plan in 2010 (echoes of Stalin's five-year plans), Russia would have turned to "post-industrial technologies".

And, there would be a "new role of the state in economic management", said Tatyana Koryagina and a former Soviet economist who worked on GosPlan, the USSR's notorious central plan.

The Communist bloc is hostile, though, to the International Monetary Fund, which this year loaned Russia $10.2bn (pounds 6.6bn) over three years, on condition it met strict economic conditions. Ms Koryagina has accused the IMF of "deliberately ruining the economy"; while Russia would pay its debts, it had no intention of depending further on foreign loans.

Roland Nash, an economist with the Russia-Europe Centre for Economic Policy, said the plan was "totally unrealistic ... where are they going to get the money from?"

Andrei Illarionov, director of the Institute for Economic Analysis in Moscow, said the plan was full of errors: "It is as if the writers in the second half of the programme forgot what was written in the first half." The Communists' growth projections (8 to 9 per cent by 1998) would require double-digit investment and production rises over the next two years.

However, he acknowledged similarities between Mr Yeltsin, who has recently moved increasingly towards Communist territory, and Mr Zyuganov. Both want increased funding for industry; both see a bigger role for government.

Nor is Mr Yeltsin in a position to complain about excessive social spending. Tax collection has plunged as the election approaches, yet he has been throwing money around on his campaign tour, making gifts of new libraries, health centres and holidays during his walkabouts.

Exactly how much more common ground is shared by the two opponents will soon become clearer; the President is expected to release his election manifesto today.