Leading Article: The malady that keeps Moscow off colour

Rarely can a president have been inaugurated in such humiliating circumstances. Boris Yeltsin, the only freely elected leader in Russian history, looked tired, ill and barely capable of governing the world's largest country when he took the oath of office in yesterday's Kremlin ceremony. What should have been a celebration of Russia's young democracy turned into yet another illustration of the fundamental instability of a country where so much power is concentrated in the hands of one sick man. Far from delivering a memorable Lincoln- or Kennedy-style inaugural address, Mr Yeltsin recited the brief oath, spent a mere 16 minutes on stage, and then hastily departed a ceremony that had been brought indoors and shortened for medical reasons.

To make matters worse, as he solemnly swore to "protect human rights and freedoms" and "earnestly serve the people", thousands of Russian soldiers were under siege from separatist rebels in Grozny, the Chechen capital. Timing their offensive to cause maximum embarrassment to Mr Yeltsin, they conclusively demonstrated this week that, if Russia's armed forces are among the biggest and most powerful in the world, they are also among the most demoralised and incompetent.

Taken together, the intensification of the Chechen war and Mr Yeltsin's poor health mean that he has begun his second term without the optimistic atmosphere and sense of a fresh start that should have accompanied his re-election. Just one month after his victory over Gennady Zyuganov, the Communist challenger, urgent political and economic problems are piling up and Mr Yeltsin has yet to come good on any of his principal campaign promises. Illness accounts for much of the uncertain start, but Mr Yeltsin and his advisers need to grasp that the Chechen war is absorbing too much of the time and energy that should be devoted to political and economic reform.

The war which Pavel Grachev, Mr Yeltsin's former defence minister, once boasted would be over in a couple of hours has already lasted 20 months and, according to the US State Department, cost 35,000 civilian lives. The Russian forces have clearly failed in their objective of drumming the rebels out of Grozny and other major towns and confining them to the mountainous south of Chechnya. Indeed, the Chechens made a better job of seizing parts of the capital this week than did the Russians when they first tried to capture Grozny in December 1994. In such a conflict, which pits highly motivated, well-armed guerrillas against poorly paid soldiers and reluctant conscripts, the initiative will always lie with the guerrillas, who can infiltrate towns, strike at will and filter away.

If any event proved that this is an unwinnable war for Russia, it was the latest Chechen offensive. During a week when it was essential that nothing should spoil Mr Yeltsin's inauguration - the first such grand national occasion since Tsar Nicholas II's coronation in 1896 - Russian forces showed themselves incapable of defending a city against fighters who are officially dismissed as "bandits" and "terrorist gangs". It makes little sense to blame the rebels, as the United States did this week, for launching their offensive. It had been clear for several weeks that the Russian forces had little intention of honouring the truce that Mr Yeltsin accepted in June as a way of taking the Chechen war out of the electoral debate. The basic responsibility for the war lies with the Kremlin, as Mr Yeltsin himself acknowledges in his more reflective moments.

Since there can be no military solution to the conflict, the only way forward is a restoration of the truce, followed by a negotiated settlement. This in turn will free Mr Yeltsin and his government to concentrate on overcoming the challenges facing Russia, particularly on the economic front. The most important problem is the state budget deficit. The government's failure to collect taxes efficiently and keep the deficit under control caused the International Monetary Fund to withhold last month's tranche of the $10.2bn (pounds 6.6bn) loan agreed earlier this year to underpin Russia's market reforms.

It is vital that the Russian government should introduce detailed tax reforms and make a determined effort at collecting taxes from cheating companies, for without the IMF funds, the entire reform process could grind to a halt. Yet a successful tax policy, like a successful anti-inflation programme, requires sustained political will, and much of the government's will is being sapped by the prolonged and brutal Chechen war.

Mr Yeltsin has probably not helped matters by reconstructing his administration in a way that seeks to balance various Kremlin interest groups and personalities against each other. He has nominated Viktor Chernomyrdin, a moderate reformer representing the oil and gas industry, to continue as prime minister. But he promoted Alexander Lebed, an erratic retired general, to be his personal security adviser, and then let him pick Russia's new defence minister, Igor Rodionov. Mr Chernomyrdin and Mr Lebed each sees himself as Mr Yeltsin's natural successor, and neither regards the other with warmth. The atmosphere of intrigue and struggle, all the thicker because of Mr Yeltsin's illness, cannot serve the cause of effective government.

Yet the chief obstacle to a successful Yeltsin second term remains the Chechen war. After this week's events, it should be clear to him that Russia's problems can only grow more acute the longer he delays peace negotiations and the search for a political settlement.