Soviet Union At the Point of No Return

By John Greenwald

Mikhail Gorbachev put the matter bluntly: It was now or never for his economic reforms. "If we take fright and stop the processes we have begun," he warned, "it would have the most serious consequences because we simply could not raise our people to such a massive task a second time." Striking a characteristic note of urgency, he added, "To stop now would be disastrous. We must not permit it under any circumstances."

Gorbachev's admonition, delivered Jan. 8 to Soviet editors and published last week by TASS, was another clear sign that his reform drive is running into stiff opposition. His economic restructuring program, known as perestroika, entered a bold new phase on New Year's Day, when 60% of Soviet industry was put on a "self-financing" basis. The new system allows enterprises to decide what to produce and where to sell it, but it also requires them to earn a profit or go out of business. Those elements of capitalist-style risk taking are frighteningly foreign to managers accustomed to relying on Moscow's central planners for virtually all business decisions. If employees of successful enterprises can anticipate increased bonuses and shared profits, others face the hitherto unknown prospect of plant closures and severe job dislocations.

The self-financing system faces challenges from all sides. Skepticism is widespread among Soviet citizens, who are being asked to work harder but have yet to see any tangible benefits in the form of increased supplies of better- quality goods. Party and government bureaucrats fear lost privileges and deviations from socialist ideology. Even some of the Soviet leader's reform- minded allies have reservations. Economist Gavril Popov, a Gorbachev adviser, has argued publicly that the self-financing plan is doomed to become a "fiction." Writing in the newspaper Sovetskaya Kultura, he said Soviet plants would still sell most of their goods to the government.

Gorbachev moved swiftly to claim the middle ground, telling Soviet editors, "We are frequently criticized by some from the right and some from the left." Referring indirectly to last year's ouster of Boris Yeltsin as head of the Moscow Communist Party organization, he denied that the move was a setback for reform. He indicated that Yeltsin, once a close ally, had pushed too hard for sweeping changes. As for criticism from the right, Gorbachev insisted that his initiatives were actually strengthening socialism rather than creating a Western-style "private-owner mentality" -- something that could not develop, he argued, as long as the state continued to own most property.

Nor is the economy the only thing Gorbachev seems determined to change. Last week he dramatically demonstrated his commitment to glasnost by meeting with Physicist Andrei Sakharov. It was the first time a Soviet leader had ever encountered so prominent a dissident face to face. The exchange took place at the Kremlin, where Gorbachev was receiving members of an international peace and human rights group. Sakharov, whom Gorbachev had freed from internal exile in 1986, handed the Soviet leader a list of 200 political prisoners whose release he sought. Apparently impressed with Gorbachev's openness, Sakharov later declared, "This kind of leader is needed in a great country at such a decisive moment in history." Coming from one of the best-known victims of Soviet repression, that was quite an endorsement.

With reporting by James O. Jackson/Moscow