Yeltsin’s Cabinet Threatens to Quit : Russia: Officials demand Parliament’s approval of radical economic reform program. They also want continuation of government’s power to rule by decree.

MOSCOW — Russia’s reformist government warned Sunday that it would resign unless it won parliamentary backing for its radical economic program and sweeping powers to carry it out.

After meeting through the day to discuss its severe setbacks in Parliament, President Boris N. Yeltsin’s Cabinet decided that, unless the Congress of People’s Deputies reverses action stripping away its authority to rule by decree and endorses its reforms, it will have to quit.

“All members of the government came to the unanimous conclusion that, if no compromise is reached, the government will have to resign,” Central Television reported late Sunday evening, quoting a top government official.

But expectations were strong that the Cabinet would survive the crisis--with its powers intact and even enhanced once the government’s conservative critics have been bested.

However, a showdown is likely with the government’s parliamentary critics over a resolution, approved Saturday, that would force Yeltsin to appoint a new prime minister within three months and then revoke his powers to rule by decree in transforming the country’s economy.

The resolution also undermines the measures, present and planned, that the government intends to use to transform the centrally planned economy inherited from the old Soviet Union, with its state ownership and bureaucratic management, into one that is entrepreneur-led and driven by market forces.

The Cabinet will submit its reform program to the Congress today, government officials said, and it will ask not only for approval of the new measures but also for the withdrawal of the earlier resolution.

Yeltsin was not present at the meeting, though he is currently prime minister as well as president, but the Cabinet is clearly counting heavily on his participation in the debate when the Congress reconvenes. Yeltsin may meet this morning with Ruslan Khasbulatov, chairman of the Russian Parliament, to discuss terms of a compromise, Central Television reported.

Yegor T. Gaidar, first deputy prime minister and the government’s economic strategist, said after the Cabinet meeting that the ministers are determined, despite the sharp criticism they encountered in Parliament, to pursue the radical program they undertook five months ago.

“We realistically assessed the situation and agreed to coordinate actions so the process of realizing the reforms is not paralyzed,” Gaidar told the Interfax news agency. “We will not agree to become a rubber stamp (as Parliament wishes) that merely confirms that reforms are under way. If this happens, we will definitely resign.”

But Gaidar expressed optimism, as did other government insiders, that the Cabinet could overcome the parliamentary hostility. “I am sure that at the moment we have agreed on effective cooperation on jointly solving all the problems,” Gaidar said after talks with legislative leaders.

The Cabinet’s threat to resign was interpreted by many, in fact, as an effort to win reaffirmation of its powers, as well as confirmation of its policies, by forcing its critics into a confrontation that they could not win.

“Yeltsin’s usual practice is that his powers increase after a political crisis, and I expect the same result this time,” said Konstantin Kagalovsky, a senior Russian government official responsible for liaison with international financial agencies. He commented at a meeting in Budapest, Hungary, of the European Bank for Reconstruction and Development. “I am sure the government will survive,” he added.

Economist Abel Aganbegyan, once an adviser to former Soviet President Mikhail S. Gorbachev, said that members of the government told him the situation would improve, politically as well as economically. “They expect . . . the government will possibly stay until the end of this year,” Aganbegyan said at the Budapest meeting.

In threatening to plunge the country into political chaos--Russia has no functioning constitution, only government bodies left from the Soviet era--and the open strife that could come with its resignation, the Cabinet sought to dramatize fundamental issues that it sees at stake.

Not only is the course of the reforms at issue, but so is the division of authority between the executive and legislative branches of government in Russia’s evolving political system.

Beyond that, however, is the question of who has the right to govern--Yeltsin by virtue of his election victory last June, his leadership of the resistance against the hard-line Communist coup d’etat in August and his almost single-handed destruction of the Soviet system, or the Congress of People’s Deputies, many of them Communist Party nominees, elected under a Soviet constitution two years ago with little chance if they ran for office today.

Yeltsin’s closest advisers, in fact, are reportedly urging him to go to the nation in a referendum--perhaps on a new constitution, perhaps on the reforms--and thus to win another popular mandate to press ahead with the radical transformation of the political and economic system.

Describing the Cabinet as “very depressed” by the parliamentary resolution, Information Minister Mikhail N. Poltoranin said that it “radically transforms the strategic course of reforms that had been worked out.”

But Poltoranin added that many of the 1,046 deputies would agree now that it was “politically incorrect” and simply the result of “the noise, the mess and the attempts to nail down the president and the government” at the Congress last week.

One of Yeltsin’s closest political advisers, Poltoranin indicated that the president is ready for a compromise--a new prime minister, who would have to be confirmed by the legislature--later this year if Parliament cancels Saturday’s resolution and ratifies the reforms in the government program.

Interfax quoted Poltoranin and Sergei Filatov, deputy speaker of the Congress, as saying that “as a result of a constructive discussion, we managed to bring our positions closer and agree on cooperation in implementing radical economic reforms.”

“We have the same purpose, and we have no right for a confrontation,” Filatov said after a joint session of the Cabinet and legislative leadership.

Filatov denied, however, that the Congress had reduced Yeltsin’s powers, granted at its last session in October, to appoint governments and rule by decree over the economy.

“The president has not been stripped of one single power that was given to him by the (previous) Congress, and this Congress has reconfirmed his authority in carrying out the reform,” Filatov declared.

Yeltsin’s opponents scored a surprise victory Saturday when they won majority approval to force him to give up the prime minister’s post and to require legislative confirmation of Cabinet ministers, making the government responsible once again to Parliament.

Ministers, seeing the loss of their potentially unrestrained powers, were initially despondent, for they could not see how they could implement the unpopular measures required by the reform program if they had to answer to Parliament.

Yeltsin had appeared secure at the opening of the Congress, and only after considerable criticism did he agree to limits on his term as prime minister and on his special powers. When his aides tried to extend both, however, conservatives forced through a series of amendments undermining his authority and watering down free-market reforms.

* THREAT TO AID PACKAGE: Help could be cut if reforms blocked, Scowcroft says. A4