Soviet Union The Shaky Fortunes of Gorby Inc.

By Jill Smolowe

By some indicators, speculation in Gorby futures remains a sound investment. Soviet Leader Mikhail Gorbachev, still the toast of the West, was host to members of the prestigious Trilateral Commission in Moscow last week, chatting amiably with Henry Kissinger, former Japanese Prime Minister Yasuhiro Nakasone and former French President Valery Giscard d'Estaing. A day later the Kremlin announced that come November Gorbachev will visit Italy, raising the intriguing prospect of a historic meeting between the Communist Party chief and the Pope. And with a quick one-two punch, Gorbachev announced plans to reduce the Soviet military budget by 14.2%, while his Foreign Minister, Eduard Shevardnadze, unveiled plans for unilateral reductions of one-fifth of the short-range nuclear missiles in Eastern Europe.

By other indicators, mostly of the Soviet domestic variety, stock in Gorby Inc. is in a tailspin. Most devastating was the news last week that the 1988 Soviet grain harvest ranked as the worst in three years. Despite desperate efforts to reform agriculture, the harvest came in 16 million tons below the previous year and 40 million tons below 1988 targets. Pravda, meanwhile, reported that the Soviet crime rate climbed nearly 17% in the past year, and attributed the rise partly to corruption spawned by new economic freedoms.

Given the contradictory signals, it was hard to know what to make of rumors that circulated last week about whether Gorbachev might soon be forced to share power or be pushed aside entirely. Rumors of political frailty have plagued Gorbachev before, but this time they cropped up in more than one place. In Moscow a Western diplomat remarked, "There are a lot of indications that Gorbachev is losing his grip." In New York City speculation swirled in the corridors of the United Nations. "Is it possible that Gorbachev has reached the crucible?" asked a West German Kremlinologist. "Yes it is." Even a senior Soviet diplomat admitted, "The worst could happen, and it could come soon." Yet for all the jittery expressions of concern, officials in Bonn, Paris and London roundly dismissed any talk of burying Gorbachev prematurely. In Washington officials contended that the rumors had been fanned by the East Germans and Czechs, and resulted from wishful thinking.

Whether genuine or idle, the chatter made plain that Gorbachev's power is neither monolithic nor unfettered. At the heart of his woes is the apparent failure of his perestroika campaign to jump-start the Soviet economy. A report put out by the Council of Ministers last week showed that, while the Soviet economy grew by 4.4% last year, farms and factories failed to produce enough quality goods to satisfy consumer demand. With wages now growing faster than productivity, inflation threatens. Other figures indicated that exports fell by 2% in 1988, while imports (much of it food) rose by 6.5%. "The honeymoon for Gorbachev has ended at home," says a Moscow-based Western diplomat. "Gorbachev's been in power too long to blame it all on Brezhnev."

Ironically, blame might rest with the success of Gorbachev's glasnost campaign. The call for openness has given rise to a crescendo of grumbling that has become grist for news reports calling attention to the shortage of consumer goods. Public debate has also offered hints of divisiveness at the top. Last week Pravda published a letter, penned by six influential conservative writers, that attacked the weekly magazine Ogonyok, a leading light of glasnost, for abusing the new openness by distorting history. The letter could not have appeared in the Communist Party daily without support from some top-ranking party members.

A few Kremlinologists read potentially ominous portents into the recent emergence of other Soviet officials into the limelight. Prime Minister Nikolai Ryzhkov has assumed an increasingly high profile, particularly in dealing with the post-earthquake cleanup operation in Armenia. Shevardnadze is also a familiar face on the evening news these days, as is Yegor Ligachev, the dour conservative who has worked at softening his brusque image since being bumped from the de facto No. 2 party slot by Gorbachev last September. Some tea-leaf readers see the increasing visibility of such officials as evidence of Gorbachev's waning clout; others see it as evidence of his strength, indicating that he feels secure enough to delegate considerable responsibility. Either way, notes a Western diplomat, "the power used to be in the hands of one man, but it's loosening now."

Rumbles of dissension in the military have also fueled the whispers. It is hardly surprising that Gorbachev's determination to beef up the civilian economy by paring military spending, including troop reductions and a cut in arms production by 19.5%, has rankled the security-preoccupied military. Two weeks ago a bimonthly military newspaper published a broadside blasting "pacifist calls to our countrymen asking irresponsibly for the Soviet Union unilaterally to 'turn swords into plowshares.' " The Kremlin quickly produced Marshal Sergei Akhromeyev, the former Chief of Staff, to pronounce his support for the cuts.

All this volleying has Kremlinologists working overtime, especially since so many of them not long ago were confidently describing Gorbachev as the man who would lead the Soviet Union into the 21st century. Still, the analysts agree on at least one point: no credible contender has yet emerged to fill Gorbachev's shoes. Even most Soviets concede that perestroika, bitter as it may be, is the last hope for economic recovery.

With reporting by Ann Blackman/Moscow and B. William Mader/New York